Indian economy grew by 8.4% in the July-September quarter, broadly in line with expectations, led by a steady farm sector and double-digit expansion in public administration, defence and other services as the impact of the base effect waned and weighed on the overall numbers.
Data released by the National Statistical Office showed the economy grew an annual 8.4% in the three months to September, slower than the 20.1% expansion recorded in the previous quarter but above the 7.4% contraction in the second quarter of the previous year. The Indian economy has recovered swiftly after the bruising impact of the lockdown to prevent the spread of Covid-19 in the first quarter of 2020-21, when it contracted a record 24.4%.
While some economists said the disaggregated data for the September quarter was far from convincing, the government asserted that the economic recovery has continued robustly in the second quarter and the base effect does not make it less noteworthy. Industry and the crucial services sectors were largely the growth drivers in the second quarter. The services sector rose 16.2% quarter on quarter and 10.2% year-on-year. The reopening of economic activity and resumption of contact-intensive services has added to the momentum. The sharp pick-up in vaccination is expected to help in boosting consumer sentiment.
The data showed that private consumption was up 11% from the previous quarter while investment was 13% higher but estimates by Care Ratings showed that as a percentage of GDP private consumption at 57.3% was the lowest in the last five quarters while investments (as measured by gross fixed capital formation - GFCF) continued to be below 30%.