GDP: Growth picks up to 6.3%

Alicia Cross
December 4, 2017

While the GVA data for the sector appear, on the face of it, to be significantly at variance from the Index of Industrial Production data that had been reported for the last quarter, the Central Statistics Office made it clear that the second-quarter IIP manufacturing growth figure of 2.2% was indeed factored in and used as a proxy for the approximately one-fifth of manufacturing GVA contributed by the "quasi-corporate and unorganised segment".

GDP growth rate was registered to be much higher in the previous quarters.

Meanwhile, former finance minister P Chidambaram has said that the GDP growth was far below what was promised by the Modi government.

"Additionally, this indicates that perhaps the impact of structural reforms is behind us and, hopefully, we can look for an upward trajectory", the minister said.

Jaitley said that the most significant aspect is the fact that this quarter's positive result was significantly impacted by the growth in the manufacturing industry. Gross fixed capital formation has risen by a little over four per cent in the second quarter this year, but as a share of GDP it continues to decline - a trend that has remained unchanged since the July-September 2016 quarter.

The previous quarter's (April- June) growth rate at 5.7 per cent was at a three-year low.

In July-September, auto sales, manufacturing, electricity generation grew more quickly than in the previous quarter.

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"6.3% is far below the PROMISE of the Modi government and far below the POTENTIAL of a well-managed Indian economy", he wrote on Twitter. Moreover, export demand has remained subdued and can effectively drag down the GDP growth in the coming quarters.

The International Monetary Fund (IMF) said it will update its growth rate forecast for India in January next year. India's Economic Stress continues; #GDP far below at 6.3% compared to 7.5% of Q2 of past year!

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. Unless the RBI eases policy soon, investments are unlikely to pick up, said an economist. "So the Q2 GDP coming in at 6.3 per cent, as compared to 7.2 per cent a year ago, is quite encouraging at this point", he said. The economic growth bounced back from a three-year low, giving the central bank enough ammunition to keep interest rates on hold on December 6 amid an uptick in inflationary pressures.

-Electricity, gas, water supply etc: 7.6 %.

"Service sector growth came in at 7.1% in Q2, compared to 8.7% in Q2 FY17 and 7.8% in Q1 FY18, with Trade, hotels, transport and communication services' increasing at a healthy pace of 9.9% compared to 7.7% in Q2 FY17".

-Financial, insurance, real estate: 5.7 %. Of the past 14 quarters, the manufacturing sector has grown by more than 9 per cent in only six.Government expenditure and public administration, which as a sector has a weight of around 13 per cent, could be another worry point.

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