India’s economic growth made an impressive comeback in the second quarter of the fiscal year 2017-2018 at 6.3% after hitting a three-year low of 5.7% in the previous quarter, majorly due to demonetisation and the massive destocking ahead of the implementation of the Goods and Services Tax.
“The economic activities that registered a growth of over 6% in the Q2 of 2017-18 against the Q2 of 2016-17 are manufacturing, electricity, gas, water supply & other utility services, and trade, hotels, transport & communication and services related to broadcasting,” Ministry of Statistics & Programme Implementation said in a statement.
In the July-September period of the current fiscal, two factors played an important role: The GST and the festive season.
Goods and Services Tax:
The second quarter GDP data recorded the impact of the GST on the economy for the first time since its implementation. In the previous quarter, massive destocking happened, which led the economic growth to a three-year low. But after the implementation of the GST, restocking began to take place, with a positive impact on the GDP.
The GST collections in
The Festive Season:
The festive season seems to have cushioned country’s growth against the slowdown. Since mid-year, sales of two-wheel and commercial vehicles, oil consumption, cargo traffic and rail freight have all increased. Sales of cars, refrigerators and televisions also surged more than 15% ahead of Dussehra and Navratri. Auto sales also reported an increase of 10% due to the festive season. The sales also surged ahead of the imposition of additional GST cess on luxury cars.