India’s economic growth figures are out—and they exceeded expectations

Going up.
Going up.
Image: Reuters/Olivia Harris
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India’s gross domestic product (GDP) grew at 7.4% in the three months that ended on Sept. 30.

Asia’s third largest economy is still one of the fastest growing globally, even though prime minister Narendra Modi is struggling to get key reforms passed.

The manufacturing sector, which needed a pick-up, grew at a healthy 9.3% in the quarter.

“The economic activities which registered growth of over 7% in the second quarter of 2015-16 over the same quarter of 2014-15 are trade, hotels and transport & communication and services related to broadcasting, financial, insurance, real estate and professional services and manufacturing,” the Central Statistics Office said in a statement.

Analysts polled by Reuters had pegged the GDP growth for the quarter at 7.3%. In the April-June quarter, the economy grew at 7%.

New calculation

In January this year, the government had changed the way it calculates India’s GDP. The new method remains unclear to many economists, and even Raghuram Rajan, the governor of the Reserve Bank of India (RBI), had remarked that he did not ”want to say anything about the numbers until we understand them better.”

Based on these new calculations, the government has announced bold growth targets for the country. In February, the finance ministry’s Economic Survey of 2014-15 estimated that the Indian economy will grow between 8.1% and 8.5% in the 2016 financial year. Further, the survey had said that the next few years could see India’s GDP growth touch double-digits.

However, not all estimates of growth are as ambitious. The International Monetary Fund’s latest estimates say that the Indian economy will grow 7.5% in 2016. The RBI has projected a 7.4% growth for the year.