The Indian economy expanded at its fastest pace in two-and-a-half years in the quarter ending June on the back of a turnaround in manufacturing as sentiment was boosted by the Narendra Modi government’s measures to help recover from the longest slump in a quarter of a century. Gross domestic product (GDP) grew by a better-than-expected 5.7% in April-June, sharply higher than 4.6% in the previous quarter, signalling a revival in the economy.
Asia’s third-largest economy expanded by less than 5% for two straight years, because of policy logjams, project delays and a string of corruption scandals. But the government said the economy had turned the corner. “With improvement witnessed in some important sectors including manufacturing as well as in the performance of exports, along with the measures taken by the government, the economy can be expected to show further improvement in the remaining part of the year,” a finance ministry statement said.
A slew of other data also pointed to better times for the country’s financial health.
Domestic passenger vehicles sales grew for the third month in a row in July, signalling a revival in demand that began when excise duties were lowered during the interim budget last February.
The National Council for Applied Economic Research’s (NCAER’s) quarterly business confidence Index (BCI) — a measure to gauge economic sentiment — rose by 13% in June 2014 from April 2014.
Data released by the Central Statistics Office (CSO) showed that the manufacturing sector, which accounts for about 15% of the economy, grew by 3.5% in April-June — the fastest in nine quarters — compared with a contraction of 1.4% in the previous quarter and a decline of 1.2% in the year-ago period.
Farm output grew 3.8% compared with 4% in the same quarter last year, but patchy monsoon rains could affect agricultural income, hurting sales of consumer goods such as refrigerators and vehicles.