India to grow at 7.4% this year, outpacing China

Indian economy will grow by 7.4% this fiscal, outpacing China to become the world's fastest growing economy, after a revision in the method of calculations.

Aided by a 7.5% expansion during October- December, Asia's third-largest economy will this fiscal see the fastest pace of growth since 2010-11 when it achieved 8.7%, even as some doubts lingered on the revised methodology.

The growth in gross domestic product (GDP) in 2010-11 was calculated based on factor cost which has now been changed to constant prices to take into account gross value addition in goods and services as well as indirect taxes. Besides, the base year has been shifted to 2011-12 from 2004-05 earlier.

Last month, the Statistics Ministry had pegged the previous year's growth at 6.9% as against 4.7% estimated previously, a revision which led to some economists including RBI Governor Raghuram Rajan seeking more clarity.

"We do need to spend more time to understanding the GDP numbers," he had said on February 3 after releasing the bi-monthly monetary policy of the central bank that retained the forecast of 5.5% GDP (calculation based on old method) growth in 2014-15.

"We will be watching the February 9 release with great care and dwell deeply into what we see there. At this point this is premature to take a strong view based on these GDP numbers," he had said.

Industry chamber Assocham said the revision was confusing as "investment is yet to revive, consumer demand is not returning with a significant pace despite a sharp reduction in crude oil prices."

The advance estimates released by the government further said the per capita net national income in 2014-15 is estimated to be Rs 88,538 showing, up 10.1% as compared to Rs 80,388 in 2013-14.

The sectors contributing to the advance estimates, include higher manufacturing growth at 6.8% and most of the services, including financial, real estate, hotels and transport growing over seven% in the fiscal.

However, agriculture is pegged at 1.1%, much lower than 3.7% achieved in the last fiscal.