Indian economy grows at 7.2% in Q3 showing signs of recovery

New Delhi: Showing signs of recovery, the Indian economy recorded a five-quarter high growth of 7.2 percent in the October-December period on good showing by key sectors like agriculture, construction and manufacturing.

Besides, the data for eight core infrastructure sectors including coal, steel, cement and petroleum, showed improved growth of 6.7 percent for January, up from 3.4 percent in same month a year ago.

The finance ministry said that the data indicate a broad-based and significant acceleration of real economic activity as projected in the Economic Survey.

"...Robust growth in manufacturing and significant acceleration in construction mark a turnaround in the country?s economic growth momentum," the ministry said in a statement.

According to the chairman of EAC to PM, Bibek Debroy, the economy is on the right track to accelerate and the current expansion in the growth rate in a reflection of the reforms initiated by the government.

He said the growth will pick up further in the upcoming quarter driven by the government's commitment to implement structural reforms and aided by higher growth in the industrial and services sector as well as spending by the Centre.

"India is on the right path to become one of the fastest major economy in the World surpassing China," Debroy said.

The economy is expected to grow at 6.6 percent in the current fiscal ending March 31, as per the second advanced estimates of the Central Statistics Office (CSO), compared to 7.1 percent in 2016-17.

The earlier estimate was 6.5 percent.

The growth for the second quarter (July-September) has been revised upwards to 6.5 percent, from 6.3 percent estimated earlier by the CSO.

The previous high was recorded at 7.5 percent in the July-September quarter of 2016-17.

The CSO said that the real GDP or Gross Domestic Product (GDP) at constant (2011-12) prices in 2017-18 is likely to be Rs 130.04 lakh crore, as against the first revised estimate for 2016-17 of Rs 121.96 lakh crore, released on January 31.

CII Director General Chandrajit Banerjee said: "The significant improvement in GDP growth, which has accelerated to a robust 7.2 percent in the third quarter as against 6.5 percent in the previous quarter is noteworthy and strengthens the perception that the Indian economy is at the threshold of a sustained rebound in growth."

The gross valued added (GVA) for manufacturing in the quarter under review grew at 8.9 percent higher than 6.9 percent in the previous quarter.

Similarly, the farm sector GVA grew at 4.1 percent compared to 2.7 percent in the previous quarter. The construction sector recorded a growth of 6.8 percent, higher than 2.8 percent in previous quarter.

The services segment including financial services grew at rate of 6.7 percent up from 6.4 percent in previous quarter.

As per the data, eight core sectors -- coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity -- had grown by 4.2 percent in December, and 7.4 percent in November of the current financial year.

Petroleum refinery production spurted 11 percent in January against a flat output in the year-ago month. Cement output jumped 20.7 percent in the month against 13.3 percent contraction in the year-ago period.

Electricity generation growth also fast paced to 8.2 percent in January against 5.2 percent in January 2017.

Coal sector output improved by 3 percent and steel production by 3.7 percent in January 2018.

Crude oil production however dropped 3.2 percent, fertilisers by 1.6 percent and natural gas by 1 percent in the month under review.

Cumulatively, the growth in the eight core sectors during April-January this fiscal slowed to 4.3 percent as against 5.1 percent in the same period last fiscal.

The growth in key sectors will have implications for the Index of Industrial Production (IIP) as these eight segments account for about 41 percent of the total factory output.