India posts higher GDP growth of 8%

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MUMBAI- India’s economic growth in the three months through December was much higher than most estimates due to a sharp fall in key subsidies which provided a boost to GDP, two government officials said.

India’s economy grew 8.4 percent during the October-December quarter, its fastest pace in one-and-half years, and much faster than the 6.6 percent estimated by economists polled by Reuters.

However, gross value added (GVA), which is a measure of the total value of goods and services produced in the economy and excludes indirect taxes and subsidies, grew 6.5 percent , prompting economists to say that GDP data overstated growth trends.

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“The wide divergence between the GVA and GDP in the October-December quarter was mainly due to a sharp fall in subsidies in that quarter largely because of lower payouts on fertilizer subsidies like Urea,” a senior government official said on Friday.

Government data showed fertiliser subsidies in the October-December quarter declined by nearly 70 percent to 307 billion rupees ($3.7 billion) from the same period a year ago. – Reuters

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