NEW DELHI /CHENNAI: After five months of decline in growth, India’s gross domestic product (GDP) jumped to 6.3 per cent in the second quarter of FY18. This is notable in the sense that in the first quarter, growth had slowed to a three-year low of 5.7 per cent.
The numbers, announced by Chief Statistician of India T C A Anant on Thursday, support the government’s stand that the economy is back on the growth path and the impact of demonetisation and GST rollout has ebbed. “It is a reversal of trends after five quarters,” said Anant.
GDP growth recovers to 6.3% in Q2 from a 3-year low of 5.7% in Q1: TCA Anant, Chief Statistician pic.twitter.com/YkXfzCPRGI— ANI (@ANI) November 30, 2017
Welcoming the robust numbers, Ficci president Pankaj Patel said this is a good opportunity to further build on confidence levels. He hoped that the next monetary policy announcement will have some good news, too, further improving the sentiments.
“The impact of demonetisation and GST are behind us and hopefully, we can look for an upward trajectory going forward. It should be reflected in the fourth quarter,” said finance minister Arun Jaitley. According to him, the economy has weathered thetransitional challenges experienced earlier in the year. The performance of the agriculture sector was poor but robust growth in manufacturing, among others, helpedboost GDP growth.
Analysts reacted positively to the news. Vaibhav Agrawal, head of research and ARQ at Angel Broking, stated the economy is coming back to the growth path. FY18 GDP growth is likely to be around 7 per cent, he added.
According to Crisil, the pick-up signals fading impact of demonetisation and destocking ahead of the implementation of GST. However, Suresh Babu, associate professor of economics at Indian Institute of Technology -Madras, said it’s too early to rejoice pointing out that quarterly blips in numbers are not uncommon.
“This is not a quantum leap,” he told Express, adding, “in core sectors we are still not out of the woods.” He said there is a possibility the number might be corrected later, a notion that revenue secretary Hasmukh Adhia sought to dispel saying the number will actually improve when the final calculation of the fourth quarter is done.
Meanwhile, with expenditure going up and revenue realisation staying lower, fiscal deficit widened to 96 per cent of FY18 target at October-end. The contrast is stark when compared with the situation a year ago; during October 2016, the deficit had stood at 79.3 per cent of the target. According to Babu, this is not surprising in the context of the stimulus initiatives of the government. “We are likely to miss the fiscal deficit target for this year,” he added.