In a major boost for Narendra Modi’s Gujarat state election campaign, India’s GDP growth sharply rebound to 6.3% in fiscal second quarter July-September from a three-year low in the first quarter, as businesses sprung into economic activity ahead of a condensed festive season and accelerated production to build inventory after the implementation of GST. India’s GDP growth in the second quarter (Jul-Sep) accelerated to 6.3% from 5.7% in Apr-Jun and 6.1% in Jan-Mar, Central Statistics Office data showed. However, the pace of growth in Jul-Sep was still way below 7.3% recorded in the corresponding quarter a year ago.
Even while beating expectations, second quarter GDP growth fell a bit short of China, with India still remaining the second fastest growing major economy behind the dragon. India ceded the top spot on the list of fastest growing major economies to China in the last fiscal year’s fourth quarter, when the country’s GDP growth fell to 6.1% following the full impact of demonetisation. Another bad quarter followed with the GDP growth in Apr-Jun falling to a three-year low of 5.7% due to the twin effects of GST and demonetisation on account of high inventory drawdown and destocking as businesses rushed to clear the stocks ahead of the implementation of GST.
A sharp bounce in manufacturing growth rate at 7% in July-September from 1.2% in the preceding quarter was among the primary drivers behind the second quarter GDP growth acceleration. On the other hand, farm growth slowed in second quarter to 1.7% from 2.3% in the preceding three-month period. Agricultural production in the second quarter was held up due to poor crop output, India’s Chief Statistician TCA Anant said.
Construction activity also recorded a decent expansion with a growth rate of 2.6% in July-September vs 2% in the previous quarter. Industrial activity also saw a spike with 5.8% growth rate in second quarter vs 1.6% in the first quarter. Electricity output growth at 7.6% vs 7% also supported economic growth.
Quarterly GVA for Q2 of 2017-18 for Trade, Hotels and Transport & Communication and Services related to broadcasting grew by 9.9% on-year. Mining and quarrying growth also picked up significantly, accelerating to 5.5% in second quarter from 0.7% in the previous quarter.