New Delhi: India’s GDP growth recovered to 6.3% in the July-September 2017 quarter on the back of revival in manufacturing activity after falling to 5.7% in the in April-June quarter, official data showed on Thursday.
However, the figure is lower than the 7.5% growth reported in the same period last year.
The July-September growth was also lower compared to China’s GDP of 6.8% in the same quarter.
While addressing a press conference to announce the quarterly GDP, India’s chief statistician T.C.A. Anant said manufacturing activity picked up in the second quarter as uncertainty cleared post roll-out of Goods and Services Tax (GST).
“Major sector which has seen a sharp decline is industry. Corporate entities were pulling down their stocks in Q1 (April-June), which seems to be in anticipation of GST price labelling effect,” Anant said.
The manufacturing sector grew at a decent 7% in the quarter under review, picking up from 1.2% in the preceding quarter. Awaiting implementation of the GST in the first quarter, companies had reduced production.
The mining sector too posted robust growth of 5.5% in the second quarter after reporting negative growth of 0.7% during April-June. Electricity and utility services sector maintained its strong performance, growing by 7.6% in the July-September quarter, up from 7% in the preceding quarter.
The construction sector continued to remain in the doldrums, with the industry reporting 2.6% growth during the second quarter, slightly up from 2% in April-June period.
The agriculture growth slowed to 1.7% from 2.3% in the first quarter. Financial and hotel sectors also showed slowing growth momentum.
|Industry||% change in GVA over previous year (Q1)||% change in GVA over previous year (Q2)|
|Agriculture, forestry and fishing||2.3||1.7|
|Mining and quarrying||(-0.7)||5.5|
|Electricity, utility services, etc||7||7.6|
|Trade, hotel, transport, etc||11.1||9.9|
|Financial, insurance, real estate||6.4||5.7|
|Public administration and defence||9.6||6|
|Gross Value Added||5.6||6.1|
Source: Central Statistical Office
Private investment remains slow as the industry battles with overcapacity due to weak demand. The government is banking on public expenditure and foreign direct investment to boost the growth. However, that may not be enough to propel the economy to 8% plus growth trajectory, said economists.
There is little sign of the economy accelerating in the third quarter, with exports showing negative growth in October, for the first time in 15 months.
The micro, small and medium enterprises (MSME) sector, which forms the backbone of the country’s manufacturing sector, has been hit hard by the government’s economic adventures of demonetisation and GST.
The big corporates are overleveraged and many of them are facing bankruptcy proceedings after defaulting on loan repayments. They are reluctant to make fresh investment.