Finance Minister Arun Jaitley on Thursday said that the country was back on the growth trajectory and the latest GDP boost from 5.7 per cent in the first quarter to 6.3 per cent in the second quarter would give fillip to job creation in the country. He said the acceleration in the GDP growth shows the "days of demonetisation and the GST are behind us". Responding to queries on the GDP growth data, Jaitley said the GDP growth of 6.3 per cent this quarter had been helped by a rapid growth in manufacturing that increased from 1.2 per cent in the first quarter to 7 per cent in the second quarter.
"The most significant aspect is the fact that this quarter's positive result has been significantly reflected in the growth in manufacturing. Fixed capital formation, being up to 4.7%, means the investment is going upward. Since May 2014, out of the 13 quarters, we have clocked upwards 7 per cent eight times, and we fell below 6 per cent only once in the last quarter. Therefore, the current figures mark the reversal - enabled by manufacturing and positive investment - in the growth trend," he said.
The real GVA growth has also shown a similar increase from 5.6 per cent in the first quarter to 6.1 per cent in the second quarter, despite a deceleration in agricultural growth from 2.3 per cent in the first quarter to 1.7 per cent in the second. However, Jaitley attributed slow growth in agriculture to the last year's base effect. "The poor agricultural growth has been due to the last year's base affect." On asking about growth in the private sector, the finance ministry said since the GDP growth data was aggregated, there's no idea how the private sector had fared. He added there were some price estimates yet to be taken into account when it came to the GDP data.
It is pertinent that the robust growth of 7.6 per cent in electricity and other utilities, and 9.9 per cent in trade, transportation and communications also powered the GDP acceleration. Overall, the services sector recorded a growth of 7.1 per cent in the second quarter. The finance minister said the economy seemed to have "weathered the transitional challenges experienced earlier in the year". "I don't want to get into the prediction game, but by all trends the momentum should be upward in the third quarter," he said.
In the first quarter, India's GDP growth had slipped to 5.7 per cent, lowest in the last 13 quarters. In the previous quarter January-March, the growth rate had come down to 6.1 per cent. With the January-March quarter result, India had lost its fastest growing economy to China, which grew at 6.9 per cent. The slowdown was largely due to the demonetisation which brought down the economic activities in formal and informal sectors.