Mumbai: The bounce is back in economic growth. It has staged a recovery in the quarter ending September, thereby stemming a five-quarter slide. That seems to suggest business has crossed the hump as far as initial GST woes are concerned. Gross domestic product grew 6.3 per cent in July-September, its fastest pace in three quarters, compared with 7.5 per cent a year earlier, government data showed on Thursday.
It had declined to 5.7 per cent in the previous quarter.The growth recovery was largely propelled by the manufacturing sector, which grew at 7 per cent. But the agriculture sector recorded a dismal growth rate of 1.7 per cent, as against 4.1 per cent in the year-ago quarter.
Finance Minister Arun Jaitley saw in the figures good reason to cheer up. “The impact of demonetisation and the Goods and Services Tax is behind us. Hopefully, growth in coming quarters will be on an upward trajectory,” Jaitley said.The data comes as a fillip for the BJP government ahead of crucial assembly elections in Gujarat starting next week. The government has been put in the pillory by the Opposition for its hasty GST launch in July. The tax, aimed at creating a single market, hit millions of small businesses due to complex rules and technical glitches.
Commenting on the GDP numbers, Congress leader Manish Tewari, however, said: “GDP captures the formal economy. It is the non-formal economy which has received a huge hit because of demonetisation and goods and services tax, which has been implemented in an extremely flawed manner.”
Hitting back, BJP spokesperson Shaina NC said, “6.3 per cent is only the starting.””India bouncing back against all odds, against demonetisation, GST, I think, this is just to suggest that yes, we are on the right track.
For all those sceptics who want to believe that statistics is some kind of lie, I think, they need to wait and watch for the next three-four months,” the BJP spokesperson said.
The optimism is shared by Jaitley. He said improved macroeconomic fundamentals have placed India on the growth trajectory of 7-8 per cent and the country would have to invest heavily in infrastructure over the next two decades to graduate 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.
Observing that inadequate infrastructure is a major hindrance in the growth, he said the government has been increasingly raising allocation for development of the sector. The funding requirement for infrastructure is huge and a whopping Rs 50 lakh crore investment is required over the next 5 years. Observing that the country has moved away from old era of double digit inflation, he said, “Our statutorily fixed target is 4 per cent. We have been able to keep our current account deficit under control, and over the last few years India has had exemplary performance in terms of being able to bring down its fiscal deficit,” he said.
The net effect of all these is that India is getting closer to a situation where the country can spend what it earns, and borrows relatively less, he said.
