It’s Not Double-engine Growth!

INDIA’S GROWTH ENGINES seem to be chugging along. Gross domestic product clocked 7.6% YoY growth in the July-September quarter, higher than the 6.2% a year ago. It is also the second-highest growth witnessed in the last five quarters. But what continues to drive growth is not surprising: government spending. While consumption demand and trade deficit were a dampener, gross fixed capital formation (GFCF), which depicts investment demand in the economy, grew by a solid 11%, a double-digit growth for the first time in five quarters, according to CMIE. The increase in GFCF was responsible for nearly 50% of the GDP growth. The share of GFCF in GDP rose to 35.3% from 34.2% a year ago, indicating investments have fuelled growth.