Indian economy expanded in Q2, after five years of declining growth

Andrew Cummings
November 30, 2017

The improvement from a 3-year-low of 5.7% in the June quarter, is a breather for Prime Minister Narendra Modi who has been grappling with slowing growth, stagnant private investments, and shrinking exports.

The GDP data for the September quarter came on a day when it was reported that India's fiscal deficit at the end of October hit 96.1% of the budget estimate for 2017-18.

British brokerage HSBC had yesterday forecast a 6.3 per cent print on a gross value added (GVA) basis on a jump in industrial growth. However, manufacturing GVA has registered better growth at 7 per cent in Q2, a remarkable acceleration from just 1.2 per cent in Q1.

According to Central Statistics Office (CSO) data, the economic activities that registered growth of over 6 per cent in the second quarter are manufacturing, electricity, gas, water supply, other utility services and trade, hotels, transport and communication, and services related to broadcasting. Before this time, India was the fastest growing economy in the world.

The year-on-year (YoY) and quarter-on-quarter (QoQ) comparisons have shown expected differences, owing to the twin impacts of demonetisation in November 2016 and GST in July 2017.

The GDP figures compared the three-month period with the same period the previous year. India's GDP surged to 6.3 % in the quarter ended in September.

Gross Fixed Capital Formation (GFCF) in terms of GDP, at current and constant (2011-2012) prices are estimated at 26.4% and 28.9%, respectively during Q2 of 2017-18, as against the corresponding rates of 27.1% and 29.4% respectively in Q2 of 2016-17.

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%, 5.5%, 2.6%, 5.7% and 6.0% respectively, in Q2 of 2017-18.

Former finance minister P Chidambaram on Thursday said that 6.3% growth in Indian economy is far below the promise of the Modi government.

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