The economic growth pace picked up to 6.3% in the three months ending in September, halting a five-quarter slide as businesses started to overcome teething troubles after the bumpy launch of GST.
This is a sound acceleration from 5.7% in April-June, but still lags China's 6.8% and Philippines' 6.9% for the three months through September.
The data will help Prime Minister Narendra Modi, who is facing criticism over the hasty July launch of GST for hitting millions of small businesses due to complex rules and technical glitches.
Gross value added, the summation of agriculture, industry and services, also grew at a higher rate of 6.1% compared to 5.6% in the previous quarter.
It was mainly manufacturing, coupled with mining, electricity and construction, that gave a boost to the GDP growth.
According to Central Statistics Office (CSO) data, the economic activities that registered growth of over 6% in the second quarter are manufacturing, electricity, gas, water supply, other utility services and trade, hotels, transport and communication, and services related to broadcasting. The agriculture, forestry and fishing sector is estimated to have grown by 1.7%.
Services sector growth fell in September quarter as compared to the previous quarter, as did the government expenditure growth.
For instance trade, hotel, transport, communication and services related to broadcasting grew by 9.9% as compared to 11.1% a quarter ago.
Finance Minister Arun Jaitley today said improved macroeconomic fundamentals has placed India on the growth trajectory of 7-8% and the country would have to invest heavily in infrastructure over the next two decades to graduate into a middle income economy.
"India today, in the last three years, was for the first time in history, has been the fastest growing major economy and we do hope that in the first instance we evolve into a middle income economy and subsequently we graduate into a developed economy. That's the economic roadmap that we have for us," he said while delivering 5th Annual Defence Estates Day lecture.
"The GDP number is exactly in line with our expectations. Upbeat corporate earnings results have been reflected in the manufacturing sector. As the revival continues, we are likely to keep the annual (GDP) forecast unchanged at 6.5%," said Tushar Arora, senior economist, HDFC Bank.