India’s economy posts first growth in five quarters

India’s economy grew at 6.3 percent in the second quarter of the financial year, official data showed on Thursday, rebounding from a sharp slowdown in the wake of high-profile reforms.

Government figures showed Asia’s third-largest economy expanded for the first time in five quarters, shaking off the lingering impact of a sudden cash ban and launch of a nationwide tax that had dragged growth to three-year lows.

India’s chief statistician T.C.A. Anant described the bounce back as “encouraging”.

“It’s quite a significant trend reversal,” he told reporters Thursday.

However he acknowledged that growth clocked 7.5 percent in the same quarter last year.

The official figures were slightly below expectations. A Bloomberg survey of economists predicted GDP growth at 6.4 percent from a three-year low of 5.7 percent in the previous June-ended quarter.

Relief for Modi

But the upturn will come as a relief for Prime Minister Narendra Modi, who has been dogged by criticism over two major reforms that stalled India’s much-needed economic expansion.

In the last 12 months Modi’s government withdrew most of India’s high-value banknotes from circulation in a snap move known as “demonetization” and rolled out a national goods and services tax.

Both measures sent shockwaves through India’s $2 trillion economy, with growth dipping to 6.1 percent in the three months ending March before bottoming out at 5.7 percent in June.

The slump cost India its title as world’s fastest-growing major economy.

The central bank last month downgraded India’s growth forecast, as the government sought to allay slowdown concerns.

The International Monetary Fund in October also lowered its growth forecast to 6.7 percent from the 7.2 percent predicted in July, pointing to the impact of demonetization and the GST.

But the government defended the pain as necessary to boost tax revenues, crackdown on corruption and absorb tens of thousands of new jobseekers into the economy every month.

Finance Minister Arun Jaitley, speaking before the release of the data on Thursday, said India was impatient for change and welcomed reform “even if there is a cost involved”.

“I am quite certain that the direction on which we have put the economy on, is a direction which is now going to continue,” he told a conference in New Delhi.

India rose 30 places to 100 in the World Bank’s latest rankings on ease of doing business, while ratings agency Moody’s this month upgraded India’s credit rating for the first time in more than a decade, citing Modi’s economic reforms.