India's economic growth in the second quarter (July-September) of current fiscal rose to 6.3 per cent compared to 5.7 per cent in first quarter (April-June). The report showed that the economic activities which registered growth of over 6.0 per cent in Q2 of 2017-18 over Q2 of 2016-17 are manufacturing, electricity, gas, water supply & other utility services and trade, hotels, transport & communication and services related to broadcasting.
The GDP growth is in line with Forecasts made by SBI Research, Ficci, Reuters poll and Bloomberg. The SBI Research in its report had said that the second quarter growth was likely to trend higher and might be in the lower end of 6-6.5 per cent band with an upward bias. Bloomberg and Reuters poll made similar predictions -in terms of GDP- and pegged the number at 6.4 per cent for the July-September quarter. Niti Aayog Vice-Chairman Rajiv Kumar expected the economy to grow in the second quarter at 6.2-6.3 per cent.
Moments after the GDP data was released, Finance Minister Arun Jaitley in a tweet said that the government's reforms to push economic growth translated into robust growth in manufacturing and service sector.
Government's reforms to push economic growth are working can be seen from that manufacturing has shown robust growth of 7% in Q2 and services at 7.1%. Gross fixed capital formation has increased from 1.6% in Q1 to 4.7% in Q2.- Arun Jaitley (@arunjaitley) November 30, 2017
While talking to reporters, Finance Minister Arun Jaitey said that poor agriculture growth had been due to the last year's base affect. On asking about growth in the private sector, Jaitley said since the GDP growth data was aggregated, there's no idea how the private sector has fared. He said the country is back on growth trajectory, and that the GDP boost would give fillip to job creation in the country. The finance minister also said there were some price estimates yet to be taken into account when it came to the GDP data.
Here are the key takeaways from today's GDP report
- GDP growth in Q2 of 2017-18 is estimated at Rs 31.66 lakh crore against Rs 29.79 lakh crore in Q2 of 2016-17, showing a growth rate of 6.3 per cent.
- Quarterly Gross Value Added (GVA) at basic price at constant (2011-12) prices for Q2 is estimated at Rs 29.18 lakh crore against Rs 27.51 lakh crore in Q2 of 2016-17 showing 6.1 per cent growth rate.
- The growth in the agriculture, forestry and fishing, mining and quarrying, construction, financial, insurance, real estate and professional services, and public administration, defence and other services is estimated to be 1.7 per cent, 5.5 per cent, 2.6 per cent, 5.7 per cent and 6.0 per cent, respectively.
- Quarterly growth from the 'mining and quarrying' sector grew by 5.5 per cent as compared to decline of 1.3 per cent in Q2 of 2016-17, while the 'manufacturing' sector grew by 7.0 per cent as compared to growth of 7.7 per cent in Q2 of 2016-17.
- With the introduction of Goods and Services Tax (GST) from July and consequent changes in the tax structure, the total tax revenue used for GDP compilation include non-GST revenue and GST revenue based on GSTR filings.
- The production of food grains during the Kharif season of agriculture year 2017-18 declined by 2.8 per cent as compared to the growth of 10.7 per cent during the same period in 2016-17.
- GDP at current prices in Q2 of 2017-18 is Rs 40.22 lakh crore against Rs 36.76 lakh crore in Q2 of 2016-17, showing a growth rate of 9.4 per cent, while GVA at basic price at current prices in the same period is Rs 36.40 lakh crore as against Rs 33.52 lakh crore in Q2 of 2016-17, an increase of 8.6 per cent.
- The quarterly GVA from electricity, gas, water supply and other utility services sector grew by 7.6 per cent as compared to growth of 5.1 per cent in Q2 of 2016-17.
- The Construction sector grew by 2.6 per cent as compared to the growth of 4.3 per cent in Q2 of 2016-17. The key indicators of the sector, production of cement and consumption of finished steel, registered growth rates of (-) 0.4 per cent and 4.1 per cent.
- Trade, Hotels and Transport & Communication and Services related to broadcasting grew by 9.9 per cent as compared to growth of 7.7 per cent in Q2 of 2016-17, while Financial, insurance, real estate and professional services grew by 5.7 per cent as compared to growth of 7.0 per cent in Q2 of 2016-17.
- The sector wise growth for other sectors as compared to the corresponding quarter in the previous year is public administration and defence and other services (6 per cent, last year 9.5 per cent).
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.
Indian economy's slowdown started after January-March 2016 quarter. Before this time, India was the fastest growing economy in the world. In the first quarter of 2016 - January-March period - the country's GDP growth rate was nearly 9.2 per cent. However, since January-March 2016 quarter, the GDP growth rate has been continuously declining. In April-June 2016 quarter, GDP growth rate slipped to 7.9 per cent - a decline of 1.3 per cent over the previous quarter. It dropped further to 7.5 per cent in the quarter ending September 2016. After this, the demonetisation was announced and economy couldn't recover since then.