Growth rate below Modi's promise: P Chidambaram

New Delhi: In a relief for the Narendra Modi government, India’s GDP growth  finally picked up in the second quarter (July to September) of FY18, expanding by 6.3 per cent mainly due to good performance by the manufacturing sector.

The rate of growth of gross fixed capital formation increased from 1.6 per cent in the first quarter to 4.7 per cent in the second quarter.

Former finance minister P. Chidambaram said the growth rate of 6.3 per cent was far below the “promise of the Modi government and far below the potential of a well-managed Indian economy”.

In a series of tweets, he said: “This a pause in the declining trend of the last five quarters. But we cannot say now whether this will mark an upward trend in the growth rate. We should wait for the growth rates over the next 3-4 quarters before we can reach a definite conclusion.”

Chief statistician T.C.A. Anant hinted that the GDP numbers could be revised upwards in future as businesses uncertain of the new GST regime may have accounted for lesser taxes.

Crisil said that growth is expected to pick up to 7.6 per cent in the second half of the current fiscal, helped by the low-base effect. “However, GST implementation glitches, ongoing changes in the GST structure, and a possible cut in capex due to rising fiscal stress may limit the upside in the subsequent quarters,” it  said in a note.