12/1/2017 3:43:20 PM
|written By : Team India Se|
India’s economic growth has bounced back from a three-year low.
India’s GDP grew at 6.3 per cent during the July-September quarter, the country’s Central Statistics Office reported on November 30. That’s lower than the 7.3 per cent GDP growth recorded in the corresponding quarter a year ago, but higher than the 5.7 per cent expansion — a three year low —in the April-June quarter.
It was good news for India’s Prime Minister Narendra Modi who is facing elections in his home state of Gujarat on December 18. He has been grappling with slowing growth in the past five quarters, with the economy dragged down by subdued private investments, demonetisation in November 2016, followed by the introduction of the Goods and Services Tax (GST) in July 2017.
“This (GDP growth) indicates that the significant impact of two structural reforms—GST and demonetisation—is now behind us and hopefully, in coming quarters, we can expect upward trajectory,” India’s Finance Minister Arun Jaitley said.
The manufacturing sector grew at 7 per cent in the September quarter compared with 1.2 per cent the previous quarter, the data released by the Ministry of Statistics showed.
In July-September, auto sales, manufacturing, construction, electricity generation grew more quickly than in the previous quarter.
Still, the Indian economy is far from complete recovery.
Agriculture, services sector, trade, hotels, transport, defence, and finance saw a slower growth in the September quarter compared to the previous quarter. Private consumption growth has also remained sluggish – and export demand subdued.
Annual growth in Indian consumer spending, which powers more than half of the $2.3 trillion economy, slowed to 1.5 per cent in the September quarter from 6.7 per cent in the previous quarter.
Indian government spending also slowed in the quarter, growing 1.3 per cent year-on-year compared with a near 17.2 per cent year-on-year growth in the June quarter.
India’s 6.3 per cent third quarter growth still lagged behind China’s 6.8 per cent and Philippines’ 6.9 per cent growth during the same period.
However, on November 17, Moody’s upgraded India’s sovereign credit rating for the first time in nearly 14 years, saying continued progress on economic and institutional reforms would boost its growth potential.
The agency expects the economy to grow 6.7 per cent in the fiscal year ending March 31, and 7.5 per cent the following year.
After a year of painfully slow growth and a major tax reform, the worst may finally be over for the Indian economy.