St consensus's GDP slowed to 6.9% in the second quarter

Economic growth in the second quarter ended September 30, as measured by the gross domestic product (GDP), is presaged slipping further as manufacturing decelerates.

A median forecast poll of 13 economists by DNA show expectations of GDP growth at 6.9%  compared with 8.9% a year ago in the same quarter. The Central Statistics Office will announce the data on Wednesday.

India’s GDP rose 7.7% in April-June.

GDP is the value of all finished goods and services produced in a country.

“The main factors pulling down the GDP are weak manufacturing and mining sector data. There were some dips in the services sector too,” said Indranil Pan, chief economist, Kotak Mahindra Bank.

Index of Industrial Production (IIP) grew at its slowest pace in two years in September.

Data released early this month show that IIP grew 1.9% in September from a year earlier, lower than a downwardly revised 3.6% growth a month ago.

“Despite 13 rate hikes by the Reserve Bank of India (RBI), inflation has not been tamed as expected. Inflation affected input prices and demand, and overall industrial production,” said Anis Chakravarthy, director, Deloitte Haskins & Sells.

In the second quarter review of the monetary policy held last month, the RBI had revised downwards the baseline projection of GDP growth for 2011-12 to 7.6% from 8% earlier.

But, according to economists, this too may not be achieved. “In light of dampening business sentiment, sluggish industrial growth, intensifying macroeconomic headwinds and the likelihood of lower monthly merchandise exports in the second half, we forecast India’s GDP to grow 7.3-7.5% this fiscal from earlier expectations of 7.5-7.7% expansion,” said Aditi Nayar, economist at Icra, the rating agency.

The slowing GDP is expected to impact the job market and salary hikes.

“As far as salary hikes are concerned, it may get seriously impacted due to the negative cues prevailing currently. The job market seems to be cautious due to the psychological impact. Recruitments happening in the banking and technological sectors are dwindling due to the signs of slowdown,” said Anish Laikar, CEO, Selectema Consulting, a search and recruitment firm in Mumbai.