GDP Is 6.3 Per Cent in September Quarter Indicating Indian Economy Is Bouncing Back Overcoming Teething Troubles of GST Implementation

December 2nd, 2017 | by Pranab Kumar Chakravarty
GDP Is 6.3 Per Cent in September Quarter Indicating Indian Economy Is Bouncing Back Overcoming Teething Troubles of GST Implementation
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AFTER about  five quarters, India’s economy has bounced back  recording 6.3 per cent Gross Domestic Product (GDP)  in July-September quarter giving  the Government  the much needed relief to defend  itself  since it was being accused  by the Opposition of finishing  off  the growth rate  by  demonetization and GST . The Government data released on Thursday showed a positive sign of growth trajectory overcoming teething troubles caused by the Goods and Services Tax (GST). The data also showed that the gross domestic product or GDP numbers expanded due to accelerated growth of manufacturing sector in the country. But the growth in some sectors including agriculture is negative causing much concern among the policymakers as well in the Finance, Agriculture and other concerned ministries. The growth of eight core-sector industries slowed to 4.7 per cent in October and agriculture growth slumped to 1.7 per cent. The country’s fiscal deficit crossed 96 per cent of Budget estimates at October-end. The Government hoped to take corrective and remedial measures. Finance Minister Arun Jaitley remained optimistic about a higher growth rate in coming quarters since October. “The last five quarters had witnessed a downward trend. This marks the reversal of this trend. This also indicates that perhaps the impact of two very significant structural reforms — demonetisation and GST — is behind us and hopefully in coming quarters we can look for an upwards trajectory,” he told  media persons  after the data was  made public. The economic activities that registered growth of over 6 per cent in the second quarter of 2017-18 year-on-year are manufacturing, electricity, gas, water supply and other utility services, trade, hotels, transport and communication and services related to broadcasting.The growth in agriculture, forestry and fishing was 1.7 per cent, mining and quarrying 5.5 per cent, construction 2.6 per cent, and ‘financial, insurance, real estate and professional services’ 5.7 per cent. The growth in public administration, defence and other services stood at 6 per cent. International rating agency   Moody has predicted recently   that 2.4 trillion USD Indian economy would be the world’s seventh-largest economy to grow.India has standardised itself for 7-8 per cent growth rate, says Jaitley. Moody expects the world’s seventh-largest economy to grow by 6.7 per cent in 2017-18 and by 7.5 per cent in the next. Chief Statistician T C A Anant hinted that the numbers could be revised upwards as businesses uncertain of the new Goods and Services Tax (GST) regime may have accounted for lesser taxes. After the five quarters of growth decline, “we see reversal of GDP in the second quarter”. Finance Minister Arun Jaitley tweeted: “Government’s reforms to push economic growth are working, can be seen from that manufacturing has shown robust growth of 7 per cent in Q2 and services at 7.1 per cent. Gross fixed capital formation has increased from 1.6 per cent in Q1 to 4.7 per cent in Q2.”The Finance Minister said the September quarter GDP growth “is quite a significant trend reversal” and has been driven by pick-up in manufacturing. Traditionally, July-September is a quarter where a lot of production takes place to cater to festive demand .In the previous quarter, businesses were delaying production amid preparations for the GST launch. The output in the September quarter is primarily for consumption and sales, he added .Gross value added (GVA), a key input of GDP that is tracked by the RBI, rose 6.1 per cent in July-September compared to 5.6 per cent in the June quarter this year and 6.8 per cent in the September quarter of the last fiscal.The expansion in GVA in the first half of the current fiscal has been estimated at 5.8 per cent, down from 7.2 per cent in the year-earlier period.

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