Reforms by government slows GDP growth rate in Q2 FY18

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This is one message policy makers can not ignore while they interpret the economic growth numbers for July-September 2017, released by the Central Statistics Office on Thursday.

GDP growth of 6.3% was still lower than 7.5% growth reported in the same period previous year.

Annual growth in consumer spending, which powers more than half of the $2.3 trillion economy, slowed to 1.5 percent in the September quarter from 6.7 percent in the previous quarter.

According to data from the Central Statistics Office (CSO), the GDP for Q2 stood at Rs 31.66 lakh crore, or a growth of 6.3 per cent.

GDP growth has been affected partly due to fall in growth in the manufacturing sector over the years. In the second quarter of the current year, it rose by seven per cent and seems to have revived after two successive quarters of tepid growth.

Still, the Indian economy is far from a complete recovery.

Finance minister Arun Jaitley said on Thursday that the trend of deceleration in economic growth on account of structural reforms has reversed.

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Jaitley said that the most significant aspect is the fact that this quarter's positive result was significantly impacted by the growth in the manufacturing industry. "Dip in public administration has also hampered the Q2 growth", Associate Economist with Care Ratings, Rucha Ranadive told Zeebiz.

According to data from the Central Statistics Office (CSO), the GDP for Q2 stood at Rs 31.66 lakh crore, or a growth of 6.3 per cent. India's GDP had grown at 7.2 per cent in the corresponding quarter a year ago. "We should wait for the growth rates over the next 3-4 quarters before we can reach a definite conclusion". Agriculture, forestry and fishing were relatively flat.

"Demonetisation and GST's impact is behind us and hopefully in coming quarters, we can look for an upwards trajectory", he said.

In November, the Modi government had also got a shot in the arm from credit rating agency Moody's, as it upgraded India's ratings after a gap of 13 years. It seems the construction sector suffers from a deeper malaise that needs to be identified and addressed.The heavy lifting, therefore, has to be done by the services sector that has a combined weight of over 46 per cent. 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).

Briefing reporters following the release of the data, Chief Statistician T.C.A. Anant said the reversal of the declining growth trend earlier is an encouraging signal.

Agriculture GDP during the quarter in question at 1.7 per cent registered lower growth.

Ahead of Gujarat elections, India's GDP (Gross Domestic Product) growth rate for the second quarter of the current fiscal has brought forth reasons for cheer for the Modi Government, was being criticised by opposition as the country's GDP had been sliding for the last five quarters after demonetisation.

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