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Last updated: 05 Dec, 2017  

India.Growth.9.Thmb.jpg Q2 GDP: Little to cheer about

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Bikky Khosla | 05 Nov, 2016

First, the good news. India's Growth Domestic Product (GDP) grew 6.3 percent during the second quarter of 2017-18, from 5.7 percent reported during the first quarter. Data released by the Central Statistics Office (CSO) shows the GDP for Q2 standing at Rs 31.66 lakh crore. Enthusiastic about the pace of growth, Finance Minister Arun Jaitley has viewed that the latest GDP data indicates that perhaps the impact of demonetisation and GST is now behind us. No doubt the data is encouraging, but according to some experts concerns still reign.

One of the most significant aspects of the latest GDP data set is that it is impacted significantly by growth in manufacturing. The sector grew 7 percent during the period, from 1.2 percent in the first quarter. The pace was slower than the 7.7 percent witnessed in the second quarter of 2016-2017, but still the improvement deserves mention. Some other sectors, including electricity, gas, water supply and other utility services, and trade, hotels, transport also registered healthy growth.

It is definitely good to see that the negative impact of demonetisation and GST implementation is gradually calming down. Additionally, the sharp rise in gross fixed capital formation growth, from 1.6 percent in the first quarter to 4.7 in the second quarter, is encouraging. This shows a revival in investment levels. However, the latest figures bring no good news for the services sector. Growth slowed in sectors like finance, transport, and hotels. Also, the 1.7 percent growth in agriculture shows that the sector is not getting proper attention.

Some experts, in fact, have viewed that the GDP growth rate itself is not that encouraging. According to a former chief economist at World Bank, the growth should have been back at over 9 percent, in the background of low oil prices. Again, global rating agency Fitch has termed this rebound as weaker than expected and reduced its growth forecast for the Indian economy for the fiscal year to end- March 2018 to 6.7 percent from 6.9 percent. These concerns are not ungrounded.

I invite your opinions.

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GDP incrase
Kunnakkattu J | Wed Dec 6 12:32:11 2017
I can't digest the increase of GDP of the period due to 1) the 8ndustrial growth not there 2) the agriculture growth not there 3) the important was more than export 4)the service field also not satisfactory 5) the indirect tax collection not good. Either there is mistake in data or deliberately manipulated data to cheer up as public are showing unhappiness over the Central Government policy decisions. Can your office is assessable to government data.

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