India’s gross domestic product (GDP) grew much slower at 8.6% in the third quarter of the current financial year, compared with 9.1% in the first half, due to poorer agricultural production, slightly denting the government’s bullish stance on growth.
The government expects growth for the full fiscal to be 9.2%, the Economic Survey for the year said on Tuesday. The figure may now be difficult to achieve, unless growth picks up sharply in the next quarter.
The message from analysts is mixed. ICRA economic advisor Saumitra Chaudhuri said he estimated the full-year growth to be around 9.4%. But Shashank Bhide, research head, National Council for Applied Economic Research, has still not updated his institute’s forecast to 9%.
Figures released by the ministry of statistics on Wednesday said that agricultural and allied services grew only 1.5%, even lower than 1.7% in the previous quarter. Farm growth was good at 3.4% in the first quarter after which it started declining.
A crop shortfall in farm commodities, essentially rice, coarse cereals and oilseeds, and lower stocks of wheat and pulses, have already impacted prices all over the country. Inflation touched a two-year high of 6.73% last month. The monsoon crop of oilseeds was short by over 18%. The government expects the year to end with 2.7% agricultural growth.
Even manufacturing industries expanded slower at 10.7%, but still managed to maintain double-digit growth. Growth also picked up significantly in mining and quarrying, to 5.7% from 3.1% in the previous quarter, and also in financial services, to 11.6% from 9.5%.
“Slower agriculture production pulled down the pace of economic growth,” said Shuchita Mehta, an economist at Standard Chartered Bank in Mumbai. “Industry and services growth continues to be strong. Inflation will stay high and we expect another rate increase in the April monetary policy.”