India's economic growth pace picked up to 6.3 percent 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 Goods and Services Tax (GST).
Ratings agency CRISIL's research arm pointed out that the rise in GDP growth signalled the fading impact of demonetisation and destocking that preluded the implementation of GST. Manufacturing grew 7% while agriculture growth was 1.7%, down from 2.3% in the trailing quarter.
However, the growth of eight core-sector industries slowed to 4.7 per cent in October and agriculture growth slumped to 1.7 per cent.
"It is well accepted that investment in infrastructure is essential to growth, it increases the productivity of existing resources and crowds in private investment, which in turn creates more jobs and leads to economic well-being", he said.
Opposition Congress on Thursday observed that GDP growth was a "temporary pause" from the downward trend though an "encouraging sign". The finance minister said a cogent GST mechanism has been developed and no country in the world has 5 per cent tax rate.
"The improvement in the GVA growth of manufacturing and mining was the key factor underpinning recovery in Q2 FY18".
It expects the economy to grow 6.7 percent in the fiscal year ending March 31, and 7.5 percent the following year.
"Assocham secretary general D.S. Rawat said, ". agriculture remains an area of concern with a mere 1.7% in the second quarter against 2.3% in the previous quarter. The country's fiscal deficit crossed 96 per cent of budget estimates at October-end, according to government data.
Government spending slowed in the quarter, growing 4.1 per cent, as against 17.1 per cent in the June quarter.
While manufacturing grew rapidly at 7% in the September quarter from merely 1.7% in the first quarter (April-June), the growth in electricity and other utilities was recorded at 7.6% and it was nearly 10% in trade, hotel, transportation and communication.
Moody's had upgraded India's sovereign credit rating for the first time in 14 years on account of progress in economic and institutional reforms boosting growth potential.