The GDP growth in the second quarter of 2017-18 compares to 5.7 per cent in April-June, the lowest growth rate since the Narendra Modi Government took office, and 7.5 per cent in the September quarter of the previous fiscal, showed Government data released here on Thursday.
Coming close on the heels of Moody's recent upgrade of India's sovereign credit for the first time in almost 14 years, the growth buoyancy comes as a shot in the arm for the Modi Government, which has been fighting off charges that demonetisation and GST launch disrupted the United States dollars 2.4-trillion economy.
He said deceleration trends in overall growth witnessed since Q1 of the last fiscal year had been reversed. "The numbers indicated that the impact of demonetisaton and GST (Goods and Services Tax) are behind us", he added.
"The improvement in the GVA growth of manufacturing and mining was the key factor underpinning recovery in Q2 FY18".
Pankaj Patel, president, FICCI, said, "The monetary policy announcement next week will be a flawless timing to give another shot to boost the sentiment".
Agricultural growth fell to 1.7 per cent in Q2 from 2.3 per cent in the previous quarter because of a sharp decline in the production of foodgrains during the kharif season.
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India's chief statistician T.C.A. Anant described the bounce back as "encouraging". "Setbacks in the agri performance can have a cascading impact on the consumer inflation", Rawat said in a statement.
Moody's Investors Services recently upgraded India's sovereign rating for the first time in almost 14 years, saying the country was poised for fast growth because of wide-ranging economic and institutional reforms by Prime Minister Narendra Modi's government.
On reforms, he said India has structurally reformed and there is no finishing line in reforms. This sector was the most impacted one due to GST implementation.
"High frequency indicators such as auto sales suggest that demand has recovered since then and manufacturing could see better numbers in the quarters ahead", Chakravarty said. "The agriculture sector seems to have underperformed given the normal rainfall and kharif output".
The report said: "In the first quarter GDP grew at 5.7 per cent, causing a lot of heartburn, but we strongly believe that the second quarter growth is likely to trend higher and might be in the lower end of 6-6.5 per cent band with an upward bias".
The reforms by the central government were leading to a faster growth as well as creating a strong and stable economy, with increased opportunities for the poor and middle class, he added.