NEW DELHI: For investors worried about the health of emerging economies, India’s gross domestic product data for April-June should supply some cheer on Monday – the country is expected to remain the fastest growing major economy for a second straight quarter.
The median estimate from a economists put GDP annual growth at 7.4 % in the quarter, just below 7.5 % in January-March.
If the number is that high, it will be a boost for Prime Minister Narendra Modi, whose image as the country’s economic saviour has taken a beating after his struggle to pass his legislative agenda.
But doubts persist over India’s new way of calculating GDP, introduced early this year, even though the method gained an endorsement from the World Bank’s chief economist. With the changed method, India’s growth topped that of China in the first quarter this year.
Still, India’s robust headline growth does not square with the not-so-rosy ground reality.
“Growth momentum has improved in the last two years,” said Kaushik Das, an economist with Deutsche Bank. “But the pace of recovery has been frustratingly slow.”
Monday’s data is expected to fuel hopes in New Delhi of taking the baton of global growth as China’s economic slowdown deepens.
However, with an economy only one-fifth the size of China’s, India is in no position to support the global economy as its northern neighbour has.
Blessed with a huge domestic market and a large cheap workforce, Asia’s third-largest economy has an opportunity to get more investment.
Lured by its prospects, iPhone maker Foxconn this month announced a $5 billion investment in India.
