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India's economic growth drops to 4.5% during July-September; worst in six years

The last time this number fell below 5% was in the March quarter of FY14 when it dropped to 4.3%.

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India's economic growth dropped to its lowest in six years during the third quarter of 2019, the government informed on Friday. Despite numerous efforts by the Centre to revive the sluggish economy, India's GDP grew a meagre 4.5% from July to September this fiscal.

As per the data released by the National Statistical Office, India's GDP growth slowed to 5%, lowest in six years and a quarter, since June. The last time this number fell below 5% was in the March quarter of FY14 when it dropped to 4.3%. 

Records show that the GDP growth has been on the decline for the past six quarters.

The slowdown in the July-September quarter was mainly due to a sharp dip in the manufacturing sector and agriculture output, the Ministry of Statistics and Programme Implementation said in a statement. Another reason was the grim industrial output data, which contracted 0.4% during the quarter against 3% expansion in the preceding three months.

Heavy rainfall in August and September, as well as delayed withdrawal of the monsoon, constrained operations in the mining and construction sectors. As a side effect, there was a comparatively lower demand for electricity from the agricultural and household sectors. Additionally, suspended industrial activity reduced the demand for electricity generation. 

Contributing to the slowdown, the output of eight core sectors of the Indian industry – coal, crude oil, natural gas, refinery products, fertiliser, steel, cement, and electricity – declined by 5.8% in October, according to data released by the Ministry of Commerce and Industry on Friday.

The core industries comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP). The combined Index of Eight Core Industries stood at 127.0 in October 2019, which declined by 5.8% as compared to the index of October 2018. Its cumulative growth from April to October 2019-20 was 0.2%, the statement said.

Earlier in the day, RBI Governor Shaktikanta Das held discussions with Finance Minister Nirmala Sitharaman over the upcoming credit policy which is due next week.

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