RBI Given Ammunition To Hold Rates As Indian Economy Recovers

RBI Given Ammunition To Hold Rates As Indian Economy Recovers

The growth in the agriculture slowed to 1.7% compared to 2.3% in the last quarter and 4.1% in the same quarter past year. "It is encouraging to see government's approach towards resolving GST related issues".

Pankaj Patel, president, FICCI, said, "The monetary policy announcement next week will be a flawless timing to give another shot to boost the sentiment".

Syncing with recent Moody's upgrade of India's sovereign credit for the first time in almost 14 years, the growth buoyancy comes at a time when the Modi Government has been facing Opposition charges of wrong implementation of demonetisation and GST that disrupted the $2.4-trillion economy.

Finance Minister Arun Jaitley has said, the GDP rate at 6.3 percent marks the reversal of declining trend in the last five quarters. Gross fixed capital formation has increased from 1.6% in Q1 to 4.7% in Q2.

China remained ahead of India for a third quarter in a row in July-September, posting 6.8 per cent growth.

"Manufacturing has emerged as bright spot at seven per cent but agriculture remains an area of concern with mere 1.7 per cent in the second quarter against 2.3 per cent in the previous quarter". Jaitley said the Goods and Services Tax (GST) started with different tax rates and they have rationalised rates on many items.

GDP numbers 'very encouraging': Key facts

Speaking at the HT Leadership Summit here, he said India has done well by growing at 7-8 per cent during the last three years.

"However, GST implementation glitches, on-going changes in the GST structure, and a possible cut in capex due to rising fiscal stress may limit upside in the subsequent quarters". Agriculture sector performance, he said, was held up because of the non-crop segment.

"A pick up in mining activity was also clearly visible and bodes well for the economy".

Former Finance Minister P Chidambaram on Thursday said he was happy that the economy has registered a growth of 6.3 per cent in the latest quarter but still one can not say whether this will mark an upward trend in the growth rate.

Ranen Banerjee, partner (public finance and economics), PwC India, said in a statement, "the GDP numbers for Q2 are not surprising and it is on expected lines given the re-stocking in manufacturing that has taken place in this quarter post the GST roll out".

The Central Statistics Office's (CSO) data disclosed that GDP for Q2 stood at Rs 31.66 lakh crore, or a growth of 6.3 per cent.

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