Shrugging off the impact of demonetisation and the Goods and Services Tax (GST), the economy seems to be on the rebound.

Official data released on Thursday showed that GDP grew 6.3 per cent in the July-September quarter, with robust expansion in manufacturing, electricity production and trade and hotels sectors. This is higher than the 5.7 per cent GDP growth in the April-June quarter, but lower than the 7.5 per cent growth in the second quarter of last fiscal.

Gross value added (GVA) grew by 6.1 per cent in the second quarter, against 5.6 per cent in the first quarter.

The economic rebound may be carried forward into the third quarter, with core sector industries growing by 4.7 per cent in October, unchanged from the previous month, supported by strong growth of refinery products and steel output.

Finance Minister Arun Jaitley said the GDP data showed the impact of demonetisation and GST has worn off. “It marks a reversal and is driven by manufacturing, and investment is growing,” he told reporters.

“We had been seeing declining numbers from the fourth quarter of 2016-17. This marks a reversal, and is encouraging,” said TCA Anant, Secretary, Ministry of Statistics and Programme Implementation.

In fact, Q2 GDP growth may have been underestimated due to lack of adequate data on GST collections and sales tax, he added.

Finance Secretary Hasmukh Adhia noted that taxes paid in the July quarter are still to be calculated and could be revised upwards

The data come ahead of the monetary policy review on December 6; most analysts expect the Reserve Bank of India to maintain rates.

However, the Centre’s financial health remains under pressure: the fiscal deficit rose to ₹5,25,321 crore between April and October, or 96.1 per cent of the Budget Estimate as receipts lagged expenditure.

The revenue deficit overshot the full-year target by 24.7 per cent to ₹ 4,01,085 crore between April and October. The Centre hopes to maintain its fiscal deficit at 3.2 per cent of GDP.

Analysis: GDP: Slowing private consumption a concern

Demonetisation, A Year After

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