business blog

Indian economy posted the fastest growth rate in the world

Photo: Anushree Fadnavis / Reuters
India is on track to achieve the fastest economic growth rate, about to overtake the entire world, as evidenced by the country’s Gross Domestic Product (GDP) figures. It is reported by Bloomberg.

India’s GDP grew by 20.1 percent in the second quarter compared to last year, slightly falling short of economists’ forecasts of 21 percent growth. The report of the Ministry of Statistics and Program Implementation showed that in the second quarter, growth was observed in various sectors of the economy. In trade, hotel and transport sectors, it amounted to 34.3 percent, in construction – 68.3 percent. The agro-industrial complex grew by 4.5 percent, the industrial complex – by 49.6 percent. The Indian rupee rose to its highest level since May, while stocks reached a new high.

Economic growth remained at 9.2 percent in the 2021 GDP forecast, the fastest among major economies, surpassing China’s 8.5 percent growth. High rates of coronavirus vaccination have allowed people to return to their normal lives and reduce damage to the service sector, with higher-than-expected manufacturing numbers contributing to record growth.

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The impact of the restrictions caused by the pandemic was less severe than in 2020, allowing for a quick recovery in demand in the economy. Loans to consumer durables, cars, real estate and small businesses rose both on a monthly and annual basis in July, data from the Reserve Bank of India showed. Business executives noted a rise in new orders in July, while a similar survey of purchasing managers in the service sector showed that the sector is gradually expanding, which only confirms the presence of demand. In addition, exports, which account for almost a fifth of the economy, have been rising over the past eight months, indicating strong global demand.

The threat of a third wave of the pandemic prevented the country’s central bank from curtailing its monetary policy with record low interest rates, which were introduced to support the economy. Prime Minister Narendra Modi plans to supplement monetary stimulus with fiscal measures. The government intends to raise 6 trillion rupees ($81.9 billion) by leasing public infrastructure over the next four years to fund new spending without further widening the budget deficit.