NEW DELHI

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 the 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.

“Upbeat corporate earnings results have been reflected in the manufacturing sector,” said Tushar Arora, senior economist at HDFC Bank.

The manufacturing sector grew at 7 per cent in the September quarter compared with 1.2 per cent the previous quarter, the data released by the Ministry of Statistics showed.

The economy has broadly moved past the disruptions encountered after a shock ban on high-value banknotes in November 2016, economists said.

Gross domestic product grew 6.3 per cent in July-September, its fastest pace in three quarters, compared with 7.5 per cent a year earlier, the data showed.

Analysts polled by Reuters had forecast annual growth of 6.4 per cent in the quarter.

Economic growth picked up from 5.7 per cent in April-June, but lagged China’s 6.8 per cent and Philippines’ 6.9 per cent for the three months through September.

In July-September, auto sales, manufacturing, construction, electricity generation grew more quickly than in the previous quarter.

Annual growth in consumer spending, which powers more than half of the $2.3 trillion economy, slowed to 1.5 per cent in the September quarter from 6.7 per cent in the previous quarter.

Government spending slowed in the quarter, growing 1.3 per cent year-on-year compared with a near 17.2 per cent year-on-year growth in the June quarter.

On Nov. 17, Moody’s upgraded India’s sovereign credit rating for the first time in nearly 14 years, saying continued progress on economic and institutional reforms would boost its growth potential.

The agency expects the economy to grow 6.7 per cent in the fiscal year ending March 31, and 7.5 per cent the following year.

— Reuters

BOX

Single rate GST not possible in India: Jaitley

New Delhi: Asserting that a single rate Goods and Services Tax (GST) is not possible in the country, Finance Minister Arun Jaitley said on Thursday it is only applicable in a nation where the purchasing power of the people is uniform.

“It is possible only in an economy where there is similarly placed population to have a single rate to start off with. In a highly differentiated society like India, it is not possible. Therefore we started with differential rates,” Jaitley said here at the HT Leadership Summit.

“We had an atrocious tax system pre-July 1. These brackets would not have been possible if everyone were not on the same page. Let me make it clear, though, a single rate GST is not possible in India. We cannot have a tax system which has the same rate for a Hawai chappal and Mercedes car,” Jaitley asserted.

The finance minister said the country will need a “boom period” like during 2003 to 2008 in order to achieve 10 per cent growth, which is a “challenging figure”. “A 10 per cent growth is a very challenging figure and a 10 per cent growth will not depend merely on domestic factors. It will also depend on how the world is moving,” said Jaitley.

-IANS