India's economy posts first growth in five quarters


TMC chief and West Bengal Chief Minister Mamata Banerjee was, however, more vocal in her criticism and claimed that a growth of 6.3 per cent was "no growth". However, it can not be said now whether this will mark an upward trend in the growth rate.

Commenting on the Q2 GDP data CII's Director General Chandrajit Banerjee said: "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".

The growth in the agriculture slowed to 1.7% compared to 2.3% in the last quarter and 4.1% in the same quarter previous year.

Patel said that the Reserve Bank's upcoming monetary policy review next week "will be a ideal timing to give another shot to boost the sentiment".

"Gross fixed capital formation has increased from 1.6 per cent in Q1 to 4.7 per cent in Q2".

But India will eventually have to fall back on domestic demand, he added. It expects the economy to grow at 6.7 per cent this fiscal and rise to 7.5 per cent in 2018-19. "Setbacks in the agri performance can have a cascading impact on the consumer inflation", Rawat said in a statement. "The latest growth outturn is in line with RBI's recent rhetoric and thus shouldn't move the needle on interest rates".

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Shah termed the growth in the manufacturing sector as a very positive sign, claiming that it will create more employment and boost the Make in India project.

"However, GST implementation glitches, on-going changes in the GST structure, and a possible cut in capex due to rising fiscal stress may limit upside in the subsequent quarters".

But the upturn will come as a relief for Prime Minister Narendra Modi, who has been dogged by criticism over two major reforms that stalled India's much-needed economic expansion. The output in the September quarter is primarily for consumption and sales, he pointed out. The economic activities that registered growth of over 6 per cent in the second quarter of 2017-18 year-on-year are manufacturing, electricity, gas, water supply and other utility services, trade, hotels, transport and communication and services related to broadcasting.

The central bank last month downgraded India's growth forecast, as the government sought to allay slowdown concerns.

Former Finance Minister P Chidambaram on Thursday said he was happy that the economy has registered a growth of 6.3 per cent in the latest quarter but still one can not say whether this will mark an upward trend in the growth rate.