India's July-September GDP Increases 6.3%

Indian Congress party supporters on the eve of the first anniversary of India's demonetisation scheme in Mumbai on November 7. Despite the move and the new goods and services tax the economy is bouncing back. Indranil Muklherjee  AFP

Indian Congress party supporters on the eve of the first anniversary of India's demonetisation scheme in Mumbai on November 7. Despite the move and the new goods and services tax the economy is bouncing back. Indranil Muklherjee AFP

His comments come ahead of the second quarter GDP data that will be released by the Central Statistics Economy later this evening.

Underlining the strong fundamentals of the economy, Finance Minister Arun Jaitley on Thursday said India has standardised itself for a growth rate of seven per cent to eight per cent. "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.

The GDP is the monetary value of all the finished goods and services produced within a country's borders in a specific time period.

Real GVA growth has shown a similar increase from 5.6 percent in the first quarter to 6.1 percent in the second quarter, despite a deceleration in agricultural growth from 2.3 percent in the first quarter to 1.7 percent in the second. Chief Statistician TCA Anant hinted that the numbers could be revised upwards as businesses uncertain of the new GST regime may have accounted for lesser taxes. A Reuters poll of economists had predicted a growth rate of 6.4 per cent, while various other bodies projected the rate between 5.9 per cent and 7.1 per cent. If it slows down, it is more towards 7 and if it paces up it is more towards 8 per cent growth. But we can not say now whether this will mark an upward trend in the growth rate.

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"The Q2 growth pick up is nearly entirely due to the growth pick up in manufacturing, which came to a standstill prior to GST due to destocking", D.K. Srivastava, Chief Policy Advisor at EY India, said. "It's possible that anticipating the need for the festive season, most of the production went into the sale and inventory restocking may happen later...inventory accumulation effect may persist in the third quarter as well", he explained.

"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.

As far as the CSO data is concerned, agriculture growth slumped to 1.7 per cent, but 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. Manufacturing grew 7% while agriculture growth was 1.7%, down from 2.3% in the trailing quarter.

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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