Former finance minister P Chidambaram, however, said 6.3% growth was "far below the promise of Modi government and potential of the well managed Indian economy". But we can not say now whether this will mark an upward trend in the growth rate.
He said deceleration trends in overall growth witnessed since Q1 of the last fiscal year had been reversed.
The Narendra Modi government on Thursday cited its policies for the acceleration of the country's gross domestic product (GDP) to 6.3 per cent during the second quarter (Q2) of 2017-18.
"Although manufacturing volume growth in Q2 FY18 was not as strong as we had initially expected on the basis of restocking after the GST, rising commodity prices and fewer discounts led to a revival in earnings", Icra Principal Economist Aditi Nayar said. Analysts says that it is an indication that firms are starting to recover after being hit earlier this year by uncertainty tied to the rollout of the GST and last year's notes ban.
India Inc expressed happiness over an increase in GDP to 6.3% from 5.7% in the last quarter and said as the GST settles down, the growth rate would be even higher.
Reacting to the GDP growth, Chief Statistician TCA Anant hinted that the numbers could be revised upwards as businesses uncertain of the new GST regime may have accounted for lesser taxes. It was 7.5 per cent in the September quarter of 2016-17.
While manufacturing grew 7 per cent in the second quarter against 1.2 per cent in the first, services sector growth showed a significant decline to 7.1 per cent from 8.7 in the previous quarter on account of the muted performance of financial, insurance and real estate sectors.
"Manufacturing growth has been one of the main reasons for the encouraging growth rate figure of 6.3 per cent for 2nd Quarter", he added.
"Traditionally, July-September is a quarter where a lot of production takes place to cater to festive demand".
According to Central Statistics Office (CSO) data, the economic activities that registered growth of over 6 per cent in the second quarter are manufacturing, electricity, gas, water supply, other utility services and trade, hotels, transport and communication, and services related to broadcasting. Great news that quarterly GDP growth accelerates to 6.3 per cent against 5.7 per cent from the previous quarter.