India GDP 2015 Growth Rate – Prospects and Analysis FY15

CARE Ratings has released it’s estimates for India’s GDP Growth rate for 2015 based on the latest statistics and data released by the Central Statistical Office (CSO) about the growth in India’s Gross Domestic Product (GDP) for Q1 FY15. The full pdf report is given below:

India GDP Growth Rate 2015

India’s economy expanded at its fastest pace in more than two years in the April-June quarter growing by 5.7% compared with 4.7% for the same period last fiscal. GDP growth for Q1 FY15 came in higher than general expectation, including CARE’s estimate of 5.2%. The GDP growth of 5.7% is mainly driven by healthy growth in ‘finance, insurance, real estate & business services’, ‘community, social and personal services’ and electricity, gas & water supply.

Highlights: India’s GDP growth for FY2014 Q1


  • Agriculture, forestry & fishing registered a growth of 3.8% in Q1 FY15, lower than the 4.0% growth registered in Q1 FY14
  • Mining & Quarrying grew at 2.1%, after registering a negative growth in Q1 FY14
  • Manufacturing grew by 3.5% as against -1.2% in Q1 FY14
  • Electricity, gas & water supply and construction grew at 10.2% and 4.8% respectively.
  • Services sector which includes ‘trade, hotel, transport & communication’; ‘finance, insurance, real estate & business services’ and ‘community, social & personal services grew by 2.8%, 10.4% and 9.1% respectively.



Private Final Consumption Expenditure increased marginally to 58.8% of GDP while Government Expenditure to GDP increased to 13.4% (12.9% in Q1FY14). However, Gross fixed capital formation experienced a marginal decline to 28.6% as against 28.7% in the previous year, indicating stagnation in the investment activities.

Prospects for India’s GDP growth in FY 2015

The GDP growth of 5.7% for Q1 FY15 has come in higher than expectations. This does provide signs of the economy coming out of the low growth phase and has given rise to expectations that economic growth would be above 5% for the rest of the year. The government has taken various steps to revive investment through clearance and removal of administrative roadblocks. This would result in higher investments in Q2 and Q3 as the spending season starts from August and lasts till December.

However, the current optimism needs to be viewed with caution. The GDP component ‘Community, social & personal services’ which is basically government spending has played an important role in the latest GDP growth numbers, with the fiscal deficit being very high in the first four months of the financial year (April-July). With the commitment to 4.1% of GDP for the fiscal deficit, there is little room for substantial contribution from this end for the remainder of the year.

Also, the poor monsoon will drag down the growth in the agriculture sector and inflation continues to be a problem, especially on the food side. This means the Reserve Bank will not be lowering rates any time soon. Therefore, while growth has been robust this quarter, sustaining it at this level would be a challenge.

It also needs to be noted that part of the growth in Q1 has been due to the low base effect, with only agriculture and the finance sector maintaining momentum over last year. As the low base effect will persist in the next two quarters, there is room for optimism this year. Care Ratings expects India’s GDP growth to be in the range of 5.2 – 5.5% for FY 2015.


This pdf report is prepared by the Economics Division of Credit Analysis &Research Limited [CARE]. CARE has taken utmost care to ensure accuracy and objectivity while developing this report based on information available in public domain. However, neither the a ccuracy nor completeness of information contained in this report is guaranteed. CARE is not responsible for any errors or omissions in analysis/inferences/views or for results obtained from the use of information contained in this report and especially states that CARE (including all divisions) has no financial liability whatsoever to the user of this pdf report.

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