Business

Economy grows 6.3% in Q2 after 15 months

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Arun Jaitley

"India has standardised itself ordinarily for a growth rate between 7 to 8 per cent".

Jailtey said achieving a 10% economic growth rate is "very challenging" and double-digit GDP growth will depend on how the world economy moves.

GDP growth rate at constant prices during the second quarter of this fiscal is estimated at six point three per cent which is up from five point seven per cent over the first quarter.

Syncing with recent Moody's upgrade of India's sovereign credit for the first time in almost 14 years, the growth buoyancy comes at a time when the Modi Government has been facing Opposition charges of wrong implementation of demonetisation and GST that disrupted the $2.4-trillion economy.

The gross fixed capital formation, a leading indicator for investment in the country, grew 4.7% in the September quarter up from just 1.6% in the previous one.

Government spending slowed in the quarter, growing 4.1 per cent, as against 17.1 per cent in the June quarter.

Finance Minister Arun Jaitley has said, the GDP rate at 6.3 percent marks the reversal of declining trend in the last five quarters.

"Manufacturing reported growth of 7 per cent, electricity, gas and water supply at 7.6 per cent, and trade, hotels, transport and communication grew at 9.9 per cent", he said.

Former Finance Minister P Chidambaram on Thursday said he was happy that the economy has registered a growth of 6.3 per cent in the latest quarter but still one can not say whether this will mark an upward trend in the growth rate. The reasons for the foreseen growth recovery are many: a rise in industrial production and exports, restocking by businesses after the transition to GST and some major festivals that would have boosted consumer demand.

"We expect the growth to pick up to 7.6 per cent in the second half of this fiscal, helped by low-base effect of the second half of fiscal 2017", the ratings agency said in a statement.

The country's economic growth recovered to more than 6 per cent in the July-September quarter, backed by strong manufacturing, allaying doubts related to disruptions caused by the goods and services tax (GST). 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.

TMC chief and West Bengal Chief Minister Mamata Banerjee was, however, more vocal in her criticism and claimed that a growth of 6.3 per cent was "no growth".

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