GDP growth slows to six-quarter low of 6.6%

The country's Gross Domestic Product (GDP) growth slowed to 6.6% in October-December quarter of 2018-19 as compared to 7% in the same quarter of the previous year, owing to lower farm and manufacturing growth, government data showed on Thursday.

"Real GDP or Gross Domestic Product (GDP) at Constant (2011-12) Prices in the year 2018-19 is likely to attain a level of Rs 141 lakh crore, as against the First Revised Estimate of GDP for the year 2017-18 of Rs 131.80 lakh crore, released on 31st January 2019. The growth in GDP during 2018-19 is estimated at 7.0% as compared to the growth rate of 7.2% in 2017-18," Central Statistics Office (CSO) said.

The Gross Value Added (GVA) growth during this period was at 6.3% as compared to 7.3% in the year ago period. The GVA in agriculture grew at 2.7% as compared to 4.6% in the same quarter last year. Similarly, manufacturing growth came down to 6.7% in the third quarter as against 8.6% in the year-ago period. Agriculture and manufacturing growth in the previous quarter was at 4.2% and 6.9% respectively.

The growth for the second quarter was revised down to 7% from 7.1%, according to the statement. The first quarter growth for 2018-19 was at 8%.

The growth in GDP during 2018-19 is estimated at 7% as compared to the growth rate of 7.2% in 2017-18, the government said in its second advance estimates. Last month, the government had estimated the growth in GDP at 7.2% for the current fiscal in its first advance estimates.

"The per capita income in real terms (at 2011-12 prices) during 2018-19 is likely to attain a level of Rs 92,718 compared to Rs 87,623 for the year 2017-18," according to the CSO data released by the Ministry of Statistics and Programme Implementation. The growth rate in per capita income is estimated at 5.8% during 2018-19, against 5.7% in the previous year.

The sectors which are likely to register a growth rate of over 7% are construction, manufacturing, public administration, defence and other services, electricity, gas, water supply and other utility services and financials, real estate and professional services.

The growth in the agriculture, forestry and fishing, mining and quarrying and trade, hotels, transport, communication and services related to broadcasting is estimated to be 2.7%, 1.2% and 6.8%, respectively.

"The third quarter growth at 6.6% is the slowest growth in six quarters. Similarly, the GDP growth for 2018-19 projected at 7% is the lowest in the last five years. This indicates that the economy is losing steam," said Devendra Kumar Pant, chief economist at India Ratings & Research.

"The primary reason for this is upwards revision in FY18 GDP growth rate in first revised estimate to 7.2% from 6.7% earlier. Some divergent trends in first and second advance estimates for FY19 are: private final consumption expenditure growth is revised upwards to 8.3% from 6.4% and investment growth is lower at 10% from the earlier estimate of 112.2%," Pant said.

The GDP growth in the fourth quarter has to be 6.5% to attain an overall growth of 7% in 2018-19, as per Ind-Ra calculation. "This on the face of it looks plausible. However, unless exports grow at 14% in this quarter, attaining 7% growth will be difficult. Also, the fixed investment growth in the fourth quarter has to be at 7.7%," Pant said.

"Net exports contributing to GDP growth are still negative while domestically both the private and the government consumption expenditure has slowed," said D K Srivastava, chief policy advisor at EY.

"The slowing momentum from the last quarter seems to have continued and may result in a similar Q4 numbers. Low inflation and lower oil prices may result in rates cut in the coming months," said Shekhar Bhandary of Kotak Mahindra Bank.