New Delhi: In a relief for the Narendra Modi government, India’s GDP growth finally picked up in the second quarter (July to September) of 2017-18, expanding by 6.3 per cent mainly due to good performance by the manufacturing sector. This reversed the trend of continuous deceleration in the nation’s economic activity seen in the past five quarters at a time when the government took the controversial decision to demonetise old currency notes of Rs 500 and Rs 1,000 last year and implemented the Goods and Services Tax (GST) in July this year.
The GDP had fallen to a three-year low of 5.7 per cent in the previous quarter (April to June 2017-18). “This indicates perhaps the impact of two significant structural reforms — demonetisation and GST — is now behind us and hopefully in the coming quarters we can look forward to an upward trajectory,” said finance minister Arun Jaitley after the GDP data was released. He said the important thing to note was that growth has come due to the strong performance of the manufacturing sector.
“The deceleration in overall growth witnessed since the first quarter of the last fiscal has been reversed,” added the finance minister. The manufacturing sector grew by 7 per cent in the second quarter against 1.2 per cent in the first quarter as companies started restocking after the implementation of GST. As per the data, electricity and other utilities grew by 7.6 per cent (from 7 per cent in the previous quarter) and trade, transportation and communications expanded by 9.9 per cent (from 11 per cent in the previous quarter). The agriculture sector, on which a large section of the population, specially in rural areas, are dependent for their livelihood, saw a slower growth of 1.7 per cent in the second quarter, against 2.3 per cent in the first one. The services sector too slowed down to 7.1 per cent during the quarter.
