What has also helped Asia’s third-largest economy move ahead amid turmoil in global energy markets is a strong acceleration in exports and a surge in private corporate investment, which has long been a major concern for economists.
Exports rose 12% despite tariff uncertainty amid strong global demand and weak exchange rates. Economists say the Indian rupee’s 15% fall against the US dollar may have helped companies improve their competitiveness, leading to increased demand for Indian goods.
Meanwhile, corporate India appears to be finally investing in new buildings and factories. India’s gross fixed capital formation, a key indicator of overall domestic public and private investment, rose nearly 12% in the first three months of this year.
“Non-government data also points to the fact that investment intentions from companies have increased in recent months, with announcements particularly concentrated in industries such as data centres, renewable energy and metals,” Madan Sabnavis, chief economist at state-owned Bank of Baroda, told the BBC.
“Of course, private investment is not widespread yet, but these are definitely signs of growth.”
While the strong numbers prompted several private brokerages to revise their full-year growth forecasts upward, they also sparked heated debate online and a war of words among politicians.
Opposition leaders like Jairam Ramesh , externalcalled the figures “statistical gymnastics”, accusing the government of repeatedly adjusting the methodology to hide what he said was India’s “terrible economic reality”.
The former finance minister also expressed serious doubts, saying the GDP got a sharp rise because it was calculated on the basis of newly revised figures and a lower base for the same period last year – a view the government has categorically rejected., externalstating that revisions are an integral part of GDP calculations.
The government’s views were echoed by World Bank Country Executive Director Neelkanth Mishra, who said the new GDP data “clarified the data as well as significantly improved the methodology,” increasing the confidence of the estimates.
But India’s new GDP data – a revised way of measuring the size of the economy – has significantly revised down India’s estimated GDP level in previous years, automatically making current growth look much higher than it would have been without the revisions.
Statistical minutiae aside, others, such as former central bank governor Raghuram Rajan, also question why, if economic growth was indeed so fast, India did not create more jobs and attract more foreign direct investment.
To make matters worse, stock markets also largely ignored the positive news.
The debate has muddied the picture for officials who had hoped the figures would help them counter growing criticism over India’s uneven growth trajectory.