Arun Jaitley on GDP growth: Impact of GST, demonetisation now behind us

Statistics rolled out by CSO today will reveal if the

Analysts polled by Reuters had forecast annual growth of 6.4 percent in the quarter.

Economic growth picked up from the three-year low of 5.7 per cent in the April-June quarter this year, but lagged neighbouring China's 6.8 per cent for the three months through September.

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.

"We should wait for the growth rates over the next 3-4 quarters before we can reach a definite conclusion", he added.

Annual growth in consumer spending, which powers more than half of the $2.3 trillion economy, slowed to 1.5 per cent in the September quarter from 6.7 per cent in the previous quarter.

India's gross domestic product (GDP) at constant (2011-12) prices in the second quarter of the current fiscal (July-September 2017-18) is estimated at Rs31,66,000 crore, against Rs29,79,000 crore in Q2 of 2016-17, showing a growth rate of 6.3 per cent. So it must give policymakers a measure of satisfaction that the slowdown seen during the last fiscal year and in the first quarter has been reversed.

Meanwhile, former finance minister P Chidambaram has said that the GDP growth was far below what was promised by the Modi government.

PUBLIC administration and defence and other services from this sector grew by 6.0 per cent for Q2 of 2017-18 as compared to growth of 9.5 per cent in Q2 of 2016-17. "So the Q2 GDP coming in at 6.3 per cent, as compared to 7.2 per cent past year, is quite encouraging at this point", he said. That's slower than the 6.4% median estimate in a Bloomberg survey of 51 economists but faster than 5.7% in the previous quarter.

"Agriculture in the quarter was held up by the non-crop segments, because crop production has done just a little bit poorly", Anant said.

In the last 12 months, Modi government withdrew most of high-value banknotes from circulation in a snap move known as "demonetisation" and rolled out a national goods and services tax.

"Demonetisation and GST's impact is behind us and hopefully in coming quarters, we can look for an upwards trajectory", he said. It is unlikely to rise again in the remaining two quarters of the current year and the overall economic growth numbers might suffer on this count.

"Also the figure for fixed capital formation means that actually investments are moving up", he added.

Finance Secretary Hasmukh Adhia said that the GDP number may go up when it is finally revised.

"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".

She further added, "Lower collections after disruptions caused by GST implementation could have affected the growth". In July-September, auto sales, manufacturing, construction, electricity generation grew more quickly than in the previous quarter.

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