India’s economic growth picked up pace in the second quarter of the fiscal, helped by strong manufacturing and signs of revival in investment, giving a timely boost to the government as it makes a case for reforms in Parliament. GDP rose 7.4% in the July-September quarter, better than 7% in the April-June period, data released by the statistics office on Monday showed, raising expectations of a further acceleration in growth in the rest of the year.
The recovery comes on a strong base of 8.4% growth in the year-ago quarter and is in line with expectations. The Indian economy grew faster than that of China, which expanded 6.9% in the quarter. Manufacturing grew 9.3% while agriculture advanced 2.2% despite a bad monsoon. “Q2 GDP numbers give a sense of satisfaction as these are on back of challenging global situation and two successive years of poor rainfall.
This is important as they have come on the strength of manufacturing. This year would be better than last year,” Finance Minister Arun Jaitley said.
The finance ministry expects the economy to grow in the vicinity of 7.5% in FY16. The strong growth dampened expectations of a surprise rate cut by the Reserve Bank of India on Tuesday, but the data on government finances at the end of October showed a comfortable fiscal deficit of 74% of the budget estimate compared with nearly 90% at the same time last year.