India Sees Growth Rebound As Businesses Adjust To GST
The tax was aimed at transforming India's 29 states into a single customs union but it has hit millions of small businesses due to complex rules and technical glitches
India's economic growth rebounded in the three months ending in September, halting a five-quarter slide as businesses started to overcome teething troubles after the bumpy launch of a national sales tax.
Data released on Thursday showing faster growth could help Prime Minister Narendra Modi, who has been facing criticism over the hasty July launch of a goods and services tax (GST).
The tax was aimed at transforming India's 29 states into a single customs union but it has hit millions of small businesses due to complex rules and technical glitches. Gross domestic product grew 6.3 percent in July-September, its fastest pace in three quarters, compared with 7.5 percent a year earlier, the data showed.
Analysts polled by Reuters had forecast annual growth of 6.4 percent in the quarter. The economy has also broadly moved past the disruptions encountered after a shock ban on high-value banknotes in November 2016, economists said. "Perhaps the impact of two very significant structural reforms - demonetisation and the GST is now behind us," Finance Minister Arun Jaitley told reporters after the release of data.
"Hopefully, in the coming quarters we can look for an upward trajectory." Economic growth picked up from 5.7 percent in April-June, but lagged China's 6.8 percent and the Philippines' 6.9 percent for the three months through September.
Many private-sector economists expect faster growth in the current quarter and January-March as consumers and businesses step up spending and the global recovery gains traction. Thursday's data showed that the manufacturing sector grew 7 percent in the September quarter compared with 1.2 percent the previous quarter, as companies build up stocks ahead of the festival season.
Earnings for major Indian companies rose at their best pace in six quarters during July-September, according to Thomson Reuters Eikon data, showcasing how profits are finally looking up after a prolonged spell of sluggish growth.