India’s economy grows 6.3% in July-Sept quarter, up from 5.7% in Q1
Demonetisation of high value currencies in November last year and introduction of Goods and Services Tax in July this year had disrupted supply chains causing a slowdown in economic activity.business Updated: Nov 30, 2017 20:52 IST
Breaking a five quarters slump, a rise in the manufacturing sector’s output pushed India’s growth rate higher to 6.3 per cent during the second quarter of 2017-18, official data showed on Thursday.
On a sequential basis, India’s GDP growth for Q2 of the current fiscal went up to 6.3 per cent, from 5.7 per cent reported during the first quarter of 2017-18.
According to data from the Central Statistics Office (CSO), the GDP for Q2 stood at Rs 31.66 lakh crore, or a growth of 6.3 per cent.
India’s GDP had grown at 7.2 per cent in the corresponding quarter last year.
On gross value added (GVA) basis, which includes taxes but excludes subsidies, India had registered a growth of 6.1 per cent during the quarter in consideration over the corresponding quarter last year, the CSO said. The GVA during the first quarter ending June came in at a lower 5.6 per cent.
“The economic activities which registered growth of over 6 per cent in Q2 of 2017-18 over Q2 of 2016-17 are ‘manufacturing’, ‘electricity, gas, water supply & other utility services’ and ‘trade, hotels, transport & communication and services related to broadcasting’,” the document on the estimates of GDP for the Q2 of 2017-18 said.
“The growth in the ‘agriculture, forestry and fishing’, ‘mining and quarrying’, ‘construction’, ‘financial, insurance, real estate and professional services’ and ‘public administration, defence and other services’ is estimated to be 1.7 per cent, 5.5 per cent, 2.6 per cent, 5.7 per cent and 6 per cent respectively, during this period,” the data said.
Briefing reporters following the release of the data, Chief Statistician T.C.A. Anant said the reversal of the declining growth trend earlier is an encouraging signal.
“The latest GDP decline started in the fourth quarter of 2015-16. So the Q2 GDP coming in at 6.3 per cent, as compared to 7.2 per cent last year, is quite encouraging at this point,” Anant said.
He said the reversal of the previous declining trend was mainly on account of a jump in manufacturing activity during the second quarter, with GVA growing at 7 per cent, as compared to the measly growth of 1.2 per cent in the previous quarter.
Agriculture GDP during the quarter in question at 1.7 per cent registered lower growth.
“Agriculture in the quarter was held up by the non-crop segments, because crop production has done just a little bit poorly,” Anant said.
“Last year was very good because of the monsoons, although this year crop production is better than the five-year average,” he added.
The Chief Statistician also said the implementation of the Goods and Services Tax (GST) from July had introduced a number of uncertainties in the GVA calculations for the second quarter, and the revised estimates could show up higher indirect tax collections once the final GST figures came in.
“GST has brought in a number of uncertainties because of tax for the period not being paid on time. “In fact, the government has extended the deadlines for filing GST returns, so the tax data for the relevant period is still coming in,” he said.
“We don’t expect the tax issue to continue for long and hope it will be cleared once the final GST figures are made available,” he added.
Anant also said the construction sector continues to grow slowly as evident from the relevant rates for the steel and cement sectors.
Commenting on the GDP numbers Finance Minister Arun Jaitley told reporters here that they showed that the impact of the two major structural reforms - demonetisation and GST - “are behind us”.
“The most significant aspect of the quarter’s reversal in GDP decline is that this has been impacted by growth in manufacturing,” Jaitley said.
“Also the figure for fixed capital formation means that actually investments are moving up,” he added.