Taken at face value, India on Monday became the fastest growing major economy in the world after its statisticians changed the way they measure Asia’s third-largest economy and showed it clocked faster growth than China in the December quarter. It marks a dramatic turnaround for an economy that a fortnight ago was assumed to be struggling to gain momentum under Prime Minister Narendra Modi’s reform-minded government. Prior to Modi’s election last May, the economy had endured its weakest phase of growth since the 1980s.
The statistical recovery is in large measure due to changes both in the way authorities calculate gross domestic product (GDP) and the base year. Under the new method, the economy expanded 7.5 percent year-on-year during the last quarter, higher than 7.3 percent growth recorded by China in the latest quarter.
New Delhi also revised up growth for the first half of fiscal 2014/15 to 7.4 percent from the 5.5 percent reported earlier and forecast the full-year GDP growth to accelerate to 7.4 percent from a revised 6.9 percent a year earlier. The new estimate is sharply higher than the Reserve Bank of India’s (RBI) growth projection of around 5.5 percent for the year under the old method.
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