India's economy slowed to 7.1 per cent in the July-September quarter of the year from 8.2 per cent in the previous quarter on the back of a sharp drop in manufacturing, agriculture and mining activities, government data showed on Friday. GDP or gross domestic product has shown the lowest growth in three years but India still remains the world's fastest-growing major economy.
"This quarter also faced the challenge of higher oil prices resulting in much higher import bill and the weakening of the rupee. The economy is on track to maintain a high growth rate in the current global environment," the finance ministry said in a statement. Growth has shown a rise over the past year; the economy had grown 6.3 per cent in the corresponding quarter last year.
The GDP numbers were below a median estimate in a poll by news agency Reuters which had pegged the annual growth of Asia's third largest economy at 7.4 per cent in the second quarter.
"The growth in this quarter seems disappointing," Economic Affairs Secretary Subhash Chandra Garg tweeted.
GDP growth for second quarter 2018-19 at 7.1% seems disappointing. Manufacturing growth at 7.4% and agriculture growth at 3.8% is steady. Construction at 6.8% and mining at -2.4% reflect monsoon months deceleration. Half year growth at 7.4% is still quite robust and healthy.
GDP at constant (2011-12) prices in the second quarter of 2018-19 is estimated at Rs 33.98 lakh crore, against Rs. 31.72 lakh crore in the corresponding quarter last year, according to the official statement.
(Also Read: Economic Growth In Second Quarter May Slow To 7.5-7.6%: SBI Report)
Mining and quarrying output has declined by 2.4 per cent in the quarter from 6.9 per cent a year ago.
The Reserve Bank of India (RBI) has forecast an economic growth of 7.4 per cent for the financial year ending in March, a recovery from 6.7 per cent in the previous year, which was the slowest in four years.Experts were surprised at the slide in GDP numbers. "Second-quarter growth data has surprised us on the downside and pose downward risk to overall 7 percent+ GVA growth in FY19. The second half of FY19 will likely see further slower growth on the back of unfavourable base effect and slower non-banking credit offtake and tighter financial conditions amid NBFC (non-banking financial company) stress," Madhavi Arora, Economist, Edelweiss Securities, was quoted as saying in a Reuters report.
"Numbers are below our expectations. Government expenditure has grown at a lower rate than what we had anticipated, the public administration and defence services part. Growth in the next two quarters could be slightly lower than this because you have an adverse base kicking in and then the NBFC (non-banking financial company) crisis. Credit growth has been slow and passenger vehicle growth slipping. Most of these indicate that growth could even be slower in the second half of FY19," Teresa John, Economist, Nirmal Bang Institutional Equities, was quoted as saying in a report by news agency Reuters. (With agency inputs).
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
