India's Economic Growth Rises to 7.2%
India's growth accelerated sharply in the third quarter of the financial year, official data showed Wednesday, as Asia's third-largest economy turned a corner after a period of slower expansion.
Figures from the Central Statistics Office showed GDP grew 7.2 percent, a significant improvement on the previous quarter as the after-effects of high-profile fiscal initiatives faded.
Most economists had predicted that a rebound which began in the last quarter would pick up momentum, but the growth rate -- the best in more than a year -- exceeded many forecasts.
"The worst of Indian economy is behind us," declared Sujan Hajra, economist at Anand Rathi securities.
The steep upswing comes after bouts of sluggish growth blamed on landmark reforms pushed by Prime Minister Narendra Modi.
Growth steadily dipped in 2017 before bottoming out at 5.7 percent in the three months to the end of June -- its lowest rate in three years.
Analysts blamed a sudden ban on high-value banknotes in late 2016 and disruption from a nationwide goods and services tax (GST), which sent shockwaves through India's $2 trillion economy.
The slowdown boded ill for India, which struggles to absorb tens of thousands of new jobseekers into the economy every month.
The government defended the pain from its policies as necessary to raise tax revenues and crack down on corruption.
But the dragging effect of these major reforms appeared to recede in the three months to September as the economy bounced back to 6.5 percent, before climbing steadily again in this latest quarter.
"There are some signs that the Indian economy is starting to recover from the soft growth patch" attributed to demonetisation and the GST, said ratings agency Moody's in a statement before the data was released.
The government promised hundreds of billions of dollars in its annual budget to boost growth and employment in rural areas hit hard by the cash ban.
Analysts said these budget measures would help India's countryside -- where most of its 1.25 billion people live -- begin slowly to recover, generating jobs and improving farm incomes.
The government estimates the economy will grow by 7.2-7.5 percent in the second half of the current fiscal year and has said the country is on track to achieve growth of eight percent "soon."
"We expect the GDP figure to maintain itself over the 7-percent mark for the next four quarters," said Ashutosh Datar, economist at Mumbai-based IIFL Institutional Equities.