Q3 GDP at 7.2%: India surpasses China, regains fastest growing economy tag

India regained its status as the world's fastest-growing major economy in the October-December quarter, surpassing China's growth after a gap of one year, driven by higher government spending and a pick-up in manufacturing and services.

India, Asia's third largest economy, grew 7.2 per cent in the October-December quarter, its fastest pace in five quarters, according to government data released on Wednesday.

This is the highest quarterly growth recorded since July-September quarter of 2016-17.

The GDP growth rate during the period managed to beat Street expectations. A Reuters survey of 35 economists predicted the data to come at 6.9 per cent.

China had recorded a growth of 6.8 per cent in the December quarter.

India's GDP growth had fallen to a three-year low of 5.7 per cent in the April-June quarter due to destocking in the run-up to the July 1 launch of the GST (goods and services tax) and a lingering impact of demonetisation.

But in July-September quarter, the economic growth picked up to a revised 6.5 per cent annually.

Meanwhile, for the fiscal year ending March 31, 2018, the government revised its GDP growth forecast higher to 6.6 per cent from 6.5 per cent earlier.

Ahead of the data release, economists polled by Reuters had expressed concerns about the increase in non-performing assets (NPAs) of state-run banks, and said if they are not handled effectively it would hurt economic activity.

Adding to those worries, the second biggest state lender, Punjab National Bank (PNB) this month revealed a loan fraud that's the biggest in India's banking history.

The fraud has cast a shadow over the workings of state-run lenders, already reeling from accumulated bad loans accumulated that are higher than those of banks in most major economies.

During the December quarter, the gross valued added (GVA) for manufacturing grew at 8.9 per cent higher than 6.9 per cent in the previous quarter. Similarly, the farm sector GVA grew at 4.1 per cent compared to 2.7 per cent in the previous quarter.

The construction sector recorded a growth of 6.8 per cent, higher than 2.8 per cent in previous quarter. The services segment including financial services grew at rate of 6.7 per cent up from 6.4 per cent in previous quarter.

OneIndia News (with agency inputs)