Q2-17 marks Indian Economy’s return to growth track; industry rejoice manufacturing led revival

The Union Finance Minister Arun Jaitley said that the deceleration trend in overall growth, which was witnessed since the First Quarter of last Fiscal Year, has been now reversed. The Finance Minister was responding to the real GDP growth data for the Second Quarter of Fiscal Year 2017-18 which was released on 30 November 2017 by the CSO. As per the data, the real GDP growth is estimated at 6.3 percent, a substantial increase from 5.7 percent in the first quarter. Real GVA growth has shown a similar increase from 5.6 percent in the first quarter to 6.1 percent in the second quarter, despite a deceleration in agricultural growth from 2.3 percent in the first quarter to 1.7 percent in the second.

The Finance Minister Shri Jaitley further said that the acceleration in growth this quarter has been helped by a rapid growth in manufacturing which increased from 1.2 percent in the first quarter to 7 percent in the Second Quarter. Robust growth of 7.6 percent in electricity and other utilities, and 9.9 percent in trade, transportation and communications also powered this acceleration. Overall, the services sector recorded a growth of 7.1 percent in the second quarter.Encouragingly, the rate of growth of gross fixed capital formation has also increased from 1.6 percent in the first quarter to 4.7 percent in the second quarter. Real private consumption growth has broadly held steady at 6.5 percent. The Finance Minister concluded that the economy now seems to have weathered the transitional challenges experienced earlier in the year and appears poised for a durable recovery going forward.

Commenting on the Second Quarter GDP data released today, Chandrajit Banerjee, Director General, CII, said “The rebound in GDP growth to 6.3%, after the uninspiring performance of the previous quarter, is noteworthy and a great confidence booster. The revival of the GDP growth print reinforces the perception that the economy is on a robust recovery phase and the short-term disruptions caused by demonetisation and GST are behind us”.

“What is encouraging is that manufacturing has emerged as a key driver of growth indicating that firms have started restocking and recovery is taking shape. Gross fixed capital formation has also picked up from last year’s lackluster pace. Going forward, CII believes that economic performance would be better in the second half as companies move to execute projects on the back of improved demand”, he

added.