The latest GDP data come as a major respite to the Narendra Modi-led government, which had been receiving flak for sending the economy into a tailspin as a result of demonetisation in November previous year, followed by the introduction of the Goods and Services Tax (GST) in July.
Finance Minister Arun Jaitley Friday said the Goods and Services Tax (GST) has made doing business easier for traders by expanding the market place and reducing tax compliance burden.
Finance Minister, Arun Jaitley, lauded the GDP growth rate and said 'the impact of demonetisaton and GST are behind us'.
"Hopefully, in the coming quarters we can look for an upward trajectory". Quarterly GDP growth accelerates to 6.3% vs 5.7% in the previous quarter.
Commenting on GDP numbers, Jaitley said that India's "GDP uptick" was essentially on the back of increased activity in the manufacturing sector. Gross fixed capital formation has risen by a little over four per cent in the second quarter this year, but as a share of GDP it continues to decline - a trend that has remained unchanged since the July-September 2016 quarter.
"High frequency indicators such as auto sales suggest that demand has recovered since then and manufacturing could see better numbers in the quarters ahead", he said.
Chidambaram also said that "6.3 per cent is far below the promise of the Modi government and far below the potential of a well-managed Indian economy".
Breaking a five-quarters' slump, a rise in the manufacturing sector's output pushed India's growth rate higher to 6.3 per cent during the second quarter of 2017-18, official data showed on Thursday, even as industry hailed the signs of economic recovery and the government said the twin impact of demonetisation and GST "are behind us". 'The deceleration in overall growth witnessed since the first quarter of the last fiscal has been reversed, ' he told reporters after the Central Statistics Office (CSO) released the GDP data. But we can not say now whether this will mark an upward trend in the growth rate. A few days later, the International Monetary Fund too had lowered its growth estimate for India from 7.2 per cent to 6.7 per cent.
"We expect RBI to remain on pause in December and February, given upside risks to inflation as well as the fiscal deficit", said Sumedh Deorukhlar, economist, BBVA in Hong Kong.
-Electricity, gas, water supply etc: 7.6 %. Of the past 14 quarters, the manufacturing sector has grown by more than 9 per cent in only six.Government expenditure and public administration, which as a sector has a weight of around 13 per cent, could be another worry point. As per the data, electricity and other utilities grew by 7.6 per cent (from 7 per cent in the previous quarter) and trade, transportation and communications expanded by 9.9 per cent (from 11 per cent in the previous quarter). "However, the deflator for this segment is declining in the past three quarters (from 5.0% to 2.1%) which is contributing to higher real growth", SBI said.