Indian Economy Picks Up Pace With A 6.5% Growth; GST & Demonetization Blues Wear Off!

Way back in 2015, prestigious and respected The Economist Intelligence Unit had predicted that by 2050, India will become third largest economy in the world after beating Germany, UK and Japan.

Then, in 2016 came demonetization which somewhat reduced the pace of development; and then this year implementation of GST caught the economy off-guard as growth rate dipped and nose-dived.

This June quarter, the growth rate was reduced to a three-year low, and analysts and business community were worried.

But not anymore.

As per latest data coming in, Indian economy has beaten all predictions and doomsday conspiracies to re-emerge as the force to reckon with.

For the September quarter, Indian economy witnessed massive 6.5 % growth rate, as the blues of demonetization and GST is slowly but gradually being left behind.

Finance Minister Arun Jaitley declared:

“The deceleration trend in the overall growth which was witnessed since the first quarter of last fiscal year has been now reversed..”

There is a new hope, and a promise of new beginning; and Indian markets are optimistic like never before.

Is this is the start of #acchedin for India?

What Triggered This Massive Rebound Of Indian Economy?

If we analyse the data released by Central Statistics Office (CSO), then the strong comeback by manufacturing seems the strongest reason why Indian economy is back on track, starting December.

In June quarter, manufacturing sector clocked a depressing growth rate of just 1.2%, which has increased to an impressive 7% during September quarter.

Business observers have always told that when manufacturing sector improves, then the ripple effect is seen everything, and the same is happening here.

This clearly means that the lingering effect of GST and demonetization has been left behind, and India is now witnessing a reformed growth path.

Finance Minister Arun Jaitley said,

“Additionally, this indicates that perhaps the impact of the two structural reforms—demonetisation and GST—is behind us and hopefully, we can look for an upward trajectory in the third and the fourth quarter,”

Besides, Mining output and electricity generation sector also witnessed an upswing, as the sector grew by 5.5% and 7.6% respectively.

But What Lagged Behind In Growth? And What Is The Future?

Agriculture sector received a setback, mainly because of unfavourable kharif output, which has a major role to play in the overall growth story. The growth of agriculture sector reduced to 1.7%, compared to 2.3% last quarter.

Besides, services sector also slowed down to 6% from 9% last quarter, and some analysts are saying this happened due to low job creation, and to some extent automation and AI which is eating away jobs at a fast pace.

Former finance minister P. Chidambaram, who belong to Congress party, and is the one of main opponent of the current Govt., said,

“We cannot say now whether this will mark an upward trend in the growth rate. We should wait for the growth rates over the next 3-4 quarters before we can reach a definite conclusion..”

Exactly 30 days ago, we had reported that India has improved Ease of Doing Business ranking by 30 spots, and now the massive improvement in overall economic growth clearly showcases that India is right now on a path to recovery.

And the recovery is happening very fast.

We will keep you updated as we receive more inputs..