Reversing a decline of five consecutive quarters in the country’s annual growth rate, the Indian economy has now grown by 6.3 per cent in July-September quarter 2017-18 on the back of a pick-up in manufacturing as businesses seemed to start overcoming teething troubles in the wake of the implementation of the Goods and Services Tax (GST).
The gross domestic product (GDP) growth had hit a three-year low of 5.7 per cent during the first quarter of 2017-18. It was 7.5 per cent in the September quarter of 2016-17.
The growth figures for the second quarter of 2017-18 were released by the Central Statistics Office (CSO) on Thursday.
Chief Statistician of India T C A Anant said, “After almost five quarters of declining GDP we see a reversal in trend. We were witnessing decline from the end of fourth quarter of 2015-16. The reversal in direction is very encouraging. Behind this change is the good growth in numbers for manufacturing ~ which has put a growth rate of 7 per cent.”
The GVA (Gross Value Added) to the economy in the reporting quarter stood at 6.1 per cent, up from 5.6 per cent in the last quarter. Anant also said that “since the GST was a challenge in the calculation of the GDP it could be a possibility that when revised tax estimates are prepared indirect tax collection in the second quarter may actually be higher than reported”.
Commenting on the second quarter growth figures, Union Finance Minister Arun Jaitley said, “Last five quarters had witnessed a downward trend, GDP at 6.3 per cent marks the reversal of that trend. Demonetisation and GST’s impact is behind us and hopefully in coming quarters, we can look for an upwards trajectory. The most significant aspect is the fact that this quarter’s positive result has been impacted significantly by the growth in manufacturing.”
The surge came mainly on the back of mining and manufacturing sectors. The mining industry jumped from a negative growth of 0.7 per cent in last quarter to 5.5 per cent this quarter. Similarly, manufacturing grew from 1.2 per cent to 7 per cent. The industrial activity also saw a spike in 5.8 per cent growth rate in the second quarter as compared to 1.6 per cent in the first quarter. Electricity output grew at 7.6 per cent. However, some sectors like agriculture, financing and real estate and transport and hotels have slowed down.
Referring to concerns over slowdown in agriculture, Anant said that the agricultural production in the second quarter was held up due to poor crop output. The farm growth slowed in the second quarter to 1.7 per cent from 2.3 per cent in the preceding three-month period.
There are also concerns over the consumption and private investment fronts which have failed to pick up despite the economy staging a comeback of sorts.
Ex-FM and senior Congress leader, P Chidambaram, tweeted his reaction, stating “Happy that the July-Sep quarter has registered a growth rate of 6.3 percent. This a PAUSE in the declining trend of the last five quarters. But we cannot say now whether this will mark an upward trend in the growth rate. We should wait for the growth rates over the next 3-4 quarters before we can reach a definite conclusion. 6.3 percent is far below the PROMISE of the Modi government and far below the POTENTIAL of a well-managed Indian economy.”
Meanwhile, in another set of data released on Thursday, the combined index of eight core industries in October 2017 came to be 4.7 per cent higher as compared to the index of October 2016. Its cumulative growth during April to October 2017-18 was 3.5 per cent.
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