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GDP rebounds to 6.3% in June-Sep quarter: Arun Jaitley says impact of GST, note ban behind us

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GDP rebounds to 6.3% in June-Sep quarter: Arun Jaitley says impact of GST, note ban behind us
  • 18:51 (IST)

    Watch: Arun Jaitley says growth back on track
     

  • 19:22 (IST)

    Highlights of GDP data released on Thursday

    The Gross Domestic Product (GDP) estimates for the second quarter, which were released on Thursday, are reflective of a positive upswing and growth momentum in the Indian economy. The GDP growth has increased to 6.3 percent (up from 5.7 percent for the first quarter (Q1) of 2017-18).

    The Gross Value Added or GVA growth has been recorded at 6.1 percent (up from 5.6 percent for the same period). The impressive performance of the manufacturing sector is particularly heartening. Manufacturing growth is up by seven percent compared to 1.2 percent in Q1 2017-18.

  • 19:18 (IST)

    Expect 8% growth in a year from now: NITI's Rajiv Kumar

  • 19:16 (IST)

    'Fiscal deficit constraint will not be a macro eco spoiler'
     

  • 19:13 (IST)

    Domestic private investment will join India growth story
     

  • 18:58 (IST)

    GDP, GVA chartered moderate sequential recovery 


    As expected, GDP and GVA growth charted a moderate sequential recovery in Q2 FY2018, led by a broad-based uptick in the industrial sector. 
     
    Unsurprisingly, the momentum in the services sector and agriculture flagged in Q2 FY2018 relative to the previous quarter, led respectively by a slowdown in central government spending and the unfavourable kharif output.
     
    The strength of the sequential recovery in Q2 FY2018 in GDP and GVA growth was mildly weaker than expected. 
     
    The improvement in the GVA growth of manufacturing and mining was they key factor underpinning the recovery in Q2 FY2018. Although manufacturing volume growth in Q2 FY2018 was not as strong as we had initially expected on the basis of restocking after the GST, rising commodity prices and fewer discounts led to a revival in earnings. 
     
    The turnaround in the performance of the mining and quarrying sector was underpinned by an improvement in volumes, a favourable base effect, and supportive commodity prices.
     
    While improving modestly, construction stood out as the slowest growing of the industrial sub-sectors in Q2 FY2018.  Weak consumer sentiment, led by factors such as the demonetisation-led drag, the full implementation of the RERaD Act, from May 1, 2017, and the implementation of the GST from July 1, 2017, weighed upon the performance of the construction sector.  
     
    The uptick in growth of gross fixed capital formation to 4.7% in Q2 FY2018 from 1.6% in Q1 FY2018 is in line with the turnaround in capital goods output (+3.7% in Q2 FY2018, -4.2% in Q1 FY2018), while somewhat at odds with other trends related to investment activity, including project announcement and completion.

    Aditi Nayar, Principal Economist, ICRA

  • 18:50 (IST)

    Reforms working: Arun Jaitley

  • 18:47 (IST)

    Necessary to take growth to 10% next decade: Niti CEO Amitabh Kant

  • 18:45 (IST)

    GDP figures in sync with expectations: Ficci 

    “Growth numbers are in sync with the expectations and re-affirm that signs of recovery are in sight. The performance of industrial sector has noted an improvement after dropping to the lowest in almost five years in the previous quarter. After the massive destocking undertaken by companies before implementation of GST, production lines are once again coming back on track. It is encouraging to see government’s approach towards resolving GST related issues. We are confident of moving to a seamless GST regime in a few months from now”, said Mr. Pankaj Patel, President, FICCI.

    There has been positive news in the form of improvement in ease of doing business rankings, Moody’s upgrade of India’s rating and the massive recapitalisation plan for banks. This is a good opportunity to further build on the confidence levels. The monetary policy announcement next week will be a perfect timing to give another shot to boost the sentiment. Also, the government should look at further consolidating its reform agenda in the forthcoming Union Budget 2018-19 to be announced two months from now to give further boost to investment”, added Mr. Patel.

  • 18:38 (IST)

    Pause in declining trend of five quarters, says Chidambaram
     

  • 18:33 (IST)

    Activities that registered growth


    According to Central Statistics Office (CSO) data, the economic activities that registered growth of over 6 percent in the second quarter are manufacturing, electricity, gas, water supply, other utility services and trade, hotels, transport and communication, and services related to broadcasting, a PTI report said.

    The agriculture, forestry and fishing sector is estimated to have grown by 1.7 percent.

  • 18:31 (IST)

    Structural reforms short-term pain


    The structural reforms are just short term pain for long term gain, says Union Health Minister JP Nadda.

  • 18:29 (IST)

    6.3% below Modi govt promise: P Chidambaram


     

  • 18:21 (IST)

    Rise in GDP will increase job creation


     

  • 18:18 (IST)

    GDP in line with expectations by RBI

  • 18:15 (IST)

    Wait for two-three quarters before coming to a conclusion: P Chidambaram

  • 18:07 (IST)

    Q2FY18 GDP Data

  • 18:05 (IST)

    Agriculture affected by non-crop segment, says TCA Anant, chief statistician
     

    Anant says the performance of agriculture has been affected by the non-crop segment. "This year's production is not as good as last year even though it is better than the five-year average," he says.

    GST introduced a certain statistical challenge for CSO, says Anant.

  • 18:03 (IST)

    Good news for Narendra Modi, but investments a concern, says Dinesh Unnikrishnan, Financial Editor at Firstpost

    The pick up in GDP growth in the July-September quarter to 6.3 percent as compared with 5.7 percent in the preceding quarter is primarily on account of the pick up in the manufacturing segment (7 percent in Q2 from 1.2 percent in Q1).

    Certainly the improved GDP numbers must have come as a relief to the Narendra Modi-government that is fighting to defend the economic slowdown. However, most other major growth drivers have failed to impress.  

    If one looks at the investment activity, GFCF (gross fixed capital formation), the growth has not been much. It grew 4.6 percent in Q2 against 3 percent in the year-ago quarter.

    As a percentage of GDP, GFCF declined to 28.9 percent from 29.8 percent. This remains a concern that the government will have to worry about.

  • 18:03 (IST)

    Good news for Narendra Modi, but investments a concern, says Dinesh Unnikrishnan, Financial Editor at Firstpost

    The pick up in GDP growth in the July-September quarter to 6.3 percent as compared with 5.7 percent in the preceding quarter is primarily on account of the pick up in the manufacturing segment (7 percent in Q2 from 1.2 percent in Q1).

    Certainly the improved GDP numbers must have come as a relief to the Narendra Modi-government that is fighting to defend the economic slowdown. However, most other major growth drivers have failed to impress.  

    If one looks at the investment activity, GFCF (gross fixed capital formation), the growth has not been much. It grew 4.6 percent in Q2 against 3 percent in the year-ago quarter.

    As a percentage of GDP, GFCF declined to 28.9 percent from 29.8 percent. This remains a concern that the government will have to worry about.

  • 18:01 (IST)

    Congress on GDP

    Informal sector not captured

  • 17:58 (IST)

    Sectors worse-off

    Agriculture at 1.7 percent. Crop production was poor

    Construction growth down,  Informal sector hit hard

    Manufacturing growth down to 7 percent from 7.7 percent

  • 17:56 (IST)

    GDP up, relief for Narendra Modi government

    Services without construction at 7.1 percent against 8.72 percent (QoQ) and 7.8 percent (YoY).

  • 17:56 (IST)

    GDP up, relief for Narendra Modi government

    Services without construction at 7.1 percent against 8.72 percent (QoQ) and 7.8 percent (YoY).

  • 17:51 (IST)

    Reverses declining trend


    Q2 FY18 GDP growth reverses declining trend seen in the last 5 quarters.

  • 17:51 (IST)

    Agriculture growth declines

    Agriculture growth comes in at 1.7 percent against 2.3% (QoQ) and 4.1 percent (YoY)

  • 17:49 (IST)

    CSO expected to hold a press conference shortly

    The Central Statistics Office (CSO) is expected to hold a press conference in a few minutes.

  • 17:46 (IST)

    Manufacturing growth increased to 7 percent in Q2 against 1.2 percent in Q1

    Gross Value Added comes in at 6.1 percent against  5.6 percent (QoQ) and 6.8 percent  (YoY).

    Construction growth up industries with construction growth at 5.8 percent against 1.61 percent (QoQ) and 5.9 percent (YoY)  

  • 17:44 (IST)

    India poised to become 3rd largest economy: Suresh Prabhu


    Commerce Minister Suresh Prabhu said, "In the next few years time we will have $5 trillion of GDP, so $1 trillion of that will come from manufacturing and the substantial part of that, we are aiming to get from small and medium enterprises (SMEs)" 

  • 17:42 (IST)

    GDP at 6.3% growth

  • 17:31 (IST)

    Fiscal deficit widens

    India’s fiscal deficit widens, hits 96.1 percent of full-year target ahead of GDP growth data.

  • 17:27 (IST)

    SMEs contribute 45% of GDP: Venkaih Naidu


     

  • 17:24 (IST)

    GDP data to be out shortly

    India's second quarter GDP data to be released shortly. SBI Research exepects it to be lower at 6-6.5 percent.

  • 17:22 (IST)

    Reducing gender gap can help boost GDP: Ivanka Trump

  • 17:21 (IST)

    India to have robust economy: S&P
     

  • 17:20 (IST)

    Congress fears

  • 17:19 (IST)

    LIVE from PIB

  • 17:19 (IST)

    Strong GDP quarter figures likely

  • 17:16 (IST)

    Achieving GDP growth of 10% is very challenging, says Arun Jaitley

    Finance Minister Arun Jaitley on Thursday said achieving 10 percent growth is challenging. This figure, he said, will depend on how the world is moving. The country has done well by growing at a rate of 7-8 percent in the last three years, he said. Jaitley was speaking at the HT Leadership Summit in New Delhi.


    Talking about how the government has brought a number of structural changes in the economy,  Jaitley said:  "I am realistic that to reach double-digit growth, for an economy to generate that kind of demand on its own, it is going to be extremely difficult." He reasoned that this was because growth does not depend on domestic factors but also on how the world is moving.

  • 17:14 (IST)

    India has standardised itself for 7-8% growth, says Jaitley

    Finance Minister Arun Jaitley on Thursday said improved macroeconomic fundamentals has placed India on the growth trajectory of 7-8 percent and the country would have to invest heavily in infrastructure over the next two decades to graduate into a middle income economy. 

    "India today, in the last three years, was for the first time in history, has been the fastest growing major economy and we do hope that in the first instance we evolve into a middle income economy and subsequently we graduate into a developed economy. That's the economic roadmap that we have
    for us," he said. 

  • 17:10 (IST)

    Rupee ends weaker 

  • 17:10 (IST)

    Rupee ends weaker 


     

  • 17:07 (IST)

    Productive investment is paying off

  • 17:05 (IST)

    Policies are not favorable to farmers

  • 17:02 (IST)

    Sensex plunges 453 points on fiscal deficit fears, F&O expiry

    Benchmark Sensex tumbled over 453 points -- its biggest single session fall in one year – to close at 33,149.35 on Thursday on widespread selling triggered by widening fiscal deficit concerns. Official data showed the country's fiscal deficit at the end of October hit 96.1 percent of the budget estimates for 2017-18.

    Investors also kept their portfolios at a low ebb ahead of second quarter GDP numbers. Squaring-up of positions by participants following end of November series contracts in the derivatives segment and a weak trend at other Asian markets also weighed on sentiment, brokers said.

New Delhi: Reversing the five quarters of slowing GDP growth, Indian economy expanded by 6.3 percent in July-September on the back of a pick-up in manufacturing. The gross domestic product (GDP) growth had hit a three-year low of 5.7 percent in the first quarter of 2017-18. It was 7.5 percent in the September quarter of 2016-17.

According to Central Statistics Office (CSO) data, the economic activities that registered growth of over 6 per cent in the second quarter are manufacturing, electricity, gas, water supply, other utility services and trade, hotels, transport and communication, and services related to broadcasting.

The agriculture, forestry and fishing sector is estimated to have grown by 1.7 per cent. Economic growth pace likely picked up in the three months ending in September, halting a five-quarter slide as businesses started to overcome teething troubles after the bumpy launch of a national sales tax.

The economy also has moved past the disruptions encountered after the shock ban on high-value banknotes in November 2016, economists say.

For July-September, the median in a Reuters poll of economists was for annual growth of 6.4 percent. Forecasts ranged from 5.9 percent to 6.8 percent.

If there was 6.4 percent growth, that would mark a sound acceleration from 5.7 percent in April-June, but still lag China’s 6.8 percent and Philippines’ 6.9 percent for the three months through September.

The data could help Prime Minister Narendra Modi, who is facing criticism over the hasty July launch of Goods and Services Tax (GST) - aimed at transforming India’s 29 states into a single customs union - but hitting millions of small businesses due to complex rules and technical glitches.

 GDP rebounds to 6.3% in June-Sep quarter: Arun Jaitley says impact of GST, note ban behind us

Representational image.

Big companies have largely adjusted to the changes while benefiting from reduced logistics costs.

Prominent Indian firms had their best profit growth in last six quarters in July-September, according to Thomson Reuters data.

The results are an indication that firms are starting to recover after being hit earlier this year by uncertainty tied to the roll out of a new tax and a shock ban on cash in late 2016.

In July-September, auto sales, manufacturing, electricity generation grew more quickly than in the previous quarter.

“We expect a gradual recovery led by the industrial sector as businesses adjust to the GST regime,” said Aditi Nayar, an economist at ICRA, the Indian arm of Moody’s Investors Service.

Ratings upgrade

On 17 November, Moody’s upgraded India’s sovereign credit rating for the first time in nearly 14 years, saying continued progress on economic and institutional reforms would boost its growth potential.

It expects the economy to grow 6.7 percent in the fiscal year ending March 31, and 7.5 percent the following year.

Many private-sector economists expect faster growth in the current quarter and January-March as consumers and businesses step up spending and global recovery gains traction.

Urjit Patel, governor of the Reserve Bank of India (RBI), said last month that signs of an upturn were visible and growth was likely to top 7 percent in those quarters.

Modi's administration hopes the ratings upgrade can attract more foreign investors, who pumped $15 billion into Indian equities in July-September, up 44 percent from the previous quarter. The main NSE share index .NSEI is up 27 percent in 2017.

Still, the world’s seventh largest economy, which grew at more than 9 percent a year from 2005 through 2008 is far from firing on all cylinders. Domestic demand and private investments remain weak.

After front-loading state spending in the fiscal year’s first half, Finance Minister Arun Jaitley has limited room to spend amid slowing revenue growth.

Finance Ministry officials hope the central bank will cut interest rates soon, but analysts say that rising global oil prices, which could pinch consumers through higher inflation, may instead force the RBI to hike in the second half of 2018, denting growth momentum.

With inputs from agencies

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Updated Date: Nov 30, 2017 19:06:54 IST