Harvey Blackwood: India's Economy Recovers in Third Quarter

Harvey Blackwood: India’s economic growth recovered in the third quarter, ending a decline that lasted five consecutive quarters as businesses began to come to terms with teething problems after a rough launch of a goods and services tax.

According to a report by Harvey Blackwood, recent economic growth in India could help Prime Minister Narendra Modi, who has come in for criticism over the rushed launch of a national sales tax in July this year.

The tax was introduced with the aim of unifying India’s 29 states into a unified customs nation but it has affected millions of small companies due to complicated regulations and technical hiccups.

However, a senior economist at Harvey Blackwood said that positive corporate earnings have been reported in the industrial sector which grew at 7 percent in the third quarter compared with 1.2 percent in the second quarter.

Harvey Blackwood economists believe that India’s economy has, for the most part, moved past the problems that emerged after a surprise ban on high-value banknotes in November of last year.

Gross domestic product grew at its fastest pace in three quarters from July to September and economic growth grew more in the third quarter than in the second but still fell behind growth posted in China and the Philippines.

Last month Moody’s rating agency upgraded India’s credit rating for the first time in almost 14 years.

Harvey Blackwood economists say the ratings agency based the upgrade on the belief that ongoing progress on economic and institutional improvements would increase India’s growth potential.

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