India growth up as firms adjust to GST
new delhi — India’s economic growth rebounded 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.
Data released on Thursday showing the growth could help Prime Minister Narendra Modi, who has been facing criticism over the hasty July launch of the Goods and Services Tax. The tax was aimed at transforming India’s 29 states into a single customs union but it has hit millions of small businesses due to complex rules and technical glitches.
“Upbeat corporate earnings results have been reflected in the manufacturing sector,” said Tushar Arora, senior economist at HDFC Bank. The manufacturing sector grew at seven per cent in the September quarter compared with 1.2 per cent the previous quarter, the data released by the Ministry of Statistics showed.
The economy has broadly moved past the disruptions encountered after a shock ban on high-value banknotes in November 2016, economists said. Gross domestic product grew 6.3 per cent in JulySeptember, its fastest pace in three quarters, compared with 7.5 per cent a year earlier, the data showed. Economic growth picked up from 5.7 per cent in April-June, but lagged China’s 6.8 per cent and the Philippines’ 6.9 per cent for the three months through September. In July-September, auto sales, manufacturing, construction, electricity generation grew more quickly than in the previous quarter.
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.
Government spending slowed, growing 1.3 per cent year-on-year compared with a near 17.2 per cent year-on-year growth in the June quarter. On November 17, 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 per cent in the fiscal year ending March 31, and 7.5 per cent the following year. —