It's A Comeback: India's GDP Recovers To 6.3%; Leaving Behind GST, De-stocking Days
After causing a lot of heartburn with three years low 5.7% GDP growth rate in April-June quarter this fiscal, Indian economy has finally shown signs of recovery posting a growth rate of 6.3% in the July-September quarter.
According to the latest figures released by CSO, GDP at constant prices in Q2 of 2017-18 is estimated at Rs 31.66 lakh crore, as against Rs 29.79 lakh crore in Q2 of 2016-17, showing a growth rate of 6.3 percent.
GST and demonetisation took a toll on India's growth rate with a slowdown in the economic activities and demand in the economy last quarter. The latest growth demonstrates that firms are starting to recover after being hit earlier this year by these uncertainties.
"The return filings have shown a tremendous increase, including the pace of adoption of GST. The uncertainty should not loom for long now," according to TCA Anant, Chief Statistician Officer.
The economic activities which registered growth of over 6.0 percent in Q2 of 2017-18 over Q2 of 2016-17 are manufacturing, electricity, gas, water supply & other utility services and trade, hotels, transport & communication and services related to broadcasting. The overall growth in the GDP is backed by these sectors altogether.
Whereas the growth in the agriculture, forestry and fishing, mining and quarrying, construction financial, insurance, real estate and professional services' and Public administration, defence & other services is estimated to be 1.7 per cent, 5.5 per cent, 2.6 per cent, 5.7 per cent and 6.0 per cent respectively, during this period.
The agriculture sector was the worst performing sector at 1.7% growth rate, apart from construction.
"The agriculture growth rate is held up by the non-crop segment. The crop segment did well. Also, last year was very good at the back of good monsoons. Compared to last year, the agriculture performance this quarter is bad, but the production levels are good compared to the average of 5 years," said Anant.
Similarly, construction growth in the private sector remains slow as it is indicator driven, explained Anant.
"Major sectors like steel, cement are not showing recovery which has led to the slowdown in the construction sector. Therefore, the capital formation in the private sector remains low. However, the same remains robust from the government's side," said Anant.
The figures would bring a major boost to investor's sentiments and corporate earnings could now pick up with buyoncy in demand recovery. This is coupled with some of the latest reforms undertaken by the government including bank recapitalisation, disinvestments and infrastructure push.
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