India Outperforms China in 2015 Economic Growth

In 2015 India’s economy grew at an average rate of 7.5% compared to China’s growth of 6.9%, as revealed by official figures.

While not unprecedented, it has been unusual in recent history for India to grow faster than China. The IMF reports that this occurred in 1981, 1989,1990 and 1999 – with 2015 being the very first instance in this millennium, so a significant event.

India’s government reported growth in the fourth quarter (October to December) to be 7.3%, which was a slight drop in previous quarters which were revised sharply higher.

While the economy did lose steam in the final months of the year, its actual pace of expansion was faster than that posted by China in the same period.

While Prime Minister Narendra Modi’s government predicted growth for the fiscal year ending March 2016 to accelerate to 7.6%, some economists claim the latest figures are at odds with other data for Asia’s third largest economy. This includes weak exports, railway freight, cement production and investment and flat order books.

Meanwhile, Ritika Mankar – an economist at Ambit Capital – said that ‘The new GDP series and the information it is conveying, not just in terms of level but also in terms of the direction, seems counterintuitive.’

Shubhada Rao, chief economist at Yes Bank of Mumbai, stated that the figures were ‘difficult to correlate with other data’, including a contraction in agriculture.
12 months ago, India’s statistics ministry revised GDP growth rates even higher – closer to that of China – simply by updating the base year used for price comparisons.
BBC Mumbai Correspondent Yogita Limaye’s statement acknowledged that ‘there has been a lot of scepticism about India’s GDP data since the government revised the way it calculates those numbers in January last year.’

While Ms. Limaye also confirmed that all of the economists she had spoken to recently had said they do not see this rapid pace of growth reflected on the ground, there remains no doubt that ‘India’s economy is indeed expanding, making it a rare bright spot among emerging nations’.

However, it must be noted that India remains a complex location to do business in. While its government has been working hard to reduce bureaucracy, many laws that could ease economic and financial problems as they arise continue to be held up in parliament.

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