GDP growth expands to 6.3 per cent, boost to govt

Government figures showed Asia's third-largest economy expanded for the first time in five quartersMore

Coming close on the heels of Moody's recent upgrade of India's sovereign credit for the first time in almost 14 years, the growth buoyancy is a shot in the arm for the Modi government, which has been fighting off charges that demonetisation and GST launch disrupted the $2.4-trillion economy.

Congress leader and former Finance Minister P. Chidambaram tweeted that he was "happy that the July-Sep quarter has registered a growth rate of 6.3 per cent" but said this was below expectations. But we can not say now whether this will mark an upward trend in the growth rate.

With the sign of growth trajectory, Finance Minister Arun Jaitley remained optimistic of a higher growth rate in coming quarters. This marks the reversal of this trend. There are expectations of a rebound in economic activities after GDP growth of a mere 5.7 per cent in the first quarter of the fiscal.

The Finance Minister was responding to the real GDP growth data for the Second Quarter of Fiscal Year 2017-18 which was released here today by the CSO (Central Statistics Office).

Chief Statistician T C A Anant said it was indicative of growth returning to normal levels.

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Jaitley said the acceleration in growth this quarter has been helped by a rapid growth in manufacturing which increased from 1.2 percent in the first quarter to 7 percent in the second quarter.

"Although manufacturing volume growth in Q2 FY18 was not as strong as we had initially expected on the basis of restocking after the GST, rising commodity prices and fewer discounts led to a revival in earnings", Icra Principal Economist Aditi Nayar said. "We should wait for the growth rates over the next 3-4 quarters before we can reach a definite conclusion", he said in a series of tweets.

Growth had slowed to a three-year low of 5.7% during the previous quarter as demand was doused by confusion about the planned rol out of a national goods and services tax. Prominent Indian firms had their best profit growth in last six quarters in July-September, according to Thomson Reuters data. Manufacturing grew 7% while agriculture growth was 1.7%, down from 2.3% in the trailing quarter.

"Manufacturing growth has been one of the main reasons for the encouraging growth rate figure of 6.3 per cent for 2nd Quarter", he added.

Mining also posted a sharp uptick in growth to 5.5 per cent from a decline of 0.7 per cent in the previous quarter.

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