India’s economy back on track after year-long slowdown
Manufacturing was up seven percent compared to the same period in 2016, a sharp jump from the 1.2 percent growth the sector registered in the second quarter.
The stronger economic growth "indicates that perhaps the impact of two very significant structural reforms... is now behind us, and hopefully, in the coming quarters, we can look for an upwards trajectory," India’s Finance Minister Arun Jaitley said after the data was released.
"I think the most significant aspect is the fact that this quarter's positive result has been impacted significantly by the growth in manufacturing," he added.
Three months ago the government revealed that economic expansion slid to just 5.7 percent from a high of 9.1 percent in the first three months of 2016.
The economic slowdown was blamed on Prime Minister Narendra Modi’s sudden decision to ban the country’s two most valuable rupee notes accounting at the time for 86 percent of India's cash.
India was the world's fastest-growing major economy at the end of 2016, with GDP expanding by seven percent. Some economists express doubts the government will be able to hit its target of seven percent growth this year or next.
Others claim that while India's national tax overhaul continues to drag on growth, the economy appears to have shrugged off the effects of the cash ban.
“Growth will continue to accelerate over the coming quarters,” Shilan Shah, India economist at Capital Economics told CNNMoney.
“Recovery is underway,” said Priyanka Kishore, lead Asia economist at Oxford Economics. “Next year we should be looking at these headwinds turning into tailwinds for the economy.”
The International Monetary Fund said it expects India’s economy to recover to 7.2 percent growth this year and accelerate to 7.7 percent in 2018.