December 1, 2015

India Growth Exceeds Estimate

India’s economy grew faster than estimated before central bank Governor Raghuram Rajan reviews interest rates on Tuesday for a final time this year.

Gross domestic product rose 7.4 percent in July-September from a year earlier, after a 7 percent expansion the previous quarter, the Central Statistics Office said in a statement in New Delhi on Monday. The median of 44 economist estimates in a Bloomberg survey was 7.3 percent. China grew 6.9 percent in the same period, while Russia contracted 4.1 percent and Brazil is forecast to shrink 4.2 percent.

India’s world-beating pace supports the case for Rajan to hold rates after cutting them this year by the most since 2009. It also offers respite to Prime Minister Narendra Modi, who’s struggling to push key economic bills through parliament. India’s stocks and currency are among Asia’s worst performers over the past month as investors become impatient with the pace of reforms.

"There are positive signs as there is an economic recovery and manufacturing is growing strongly," said Prasanna Ananthasubramanian, chief economist at ICICI Securities Primary Dealership in Mumbai. "The RBI is not going to cut rates because they have already cut and are waiting for the transmission."

Gross value added -- a component of GDP closely watched by Rajan -- rose 7.4 percent in April-September from a year earlier, matching the forecast, after a 7.1 percent increase in the previous quarter.

Manufacturing output rose 9.3 percent during the period, financial services 9.7 percent, and trade and hotels grew 10.6 percent. India’s electricity and gas production rose 6.7 percent while the construction sector expanded 2.6 percent.

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