GDP growth falls to 4.5% in September quarter

Prime Minister Narendra Modi's government has taken several steps, including a big cut in corporate tax rate in September, to boost investments and bolster economic growth.

Economists also see Reserve Bank of India cutting its repo rate for the sixth time in a row, by 25 basis points, to 4.90% at its December 3-5 meeting.

According to the data released by National Statistical Office (NSO), the gross value added (GVA) growth in the manufacturing sector contracted by 1% in the second quarter of this fiscal from 6.9% expansion a year ago.

Similarly, farm sector GVA growth remained subdued at 2.1%, down from 4.9% in the corresponding period of the previous fiscal.

Construction sector GVA growth too slowed to 3.3% from 8.5% earlier. Mining sector growth was recorded at 0.1% as against 2.2% contraction a year ago.

Electricity, gas, water supply and other utility services growth also slowed to 3.6% from 8.7% a year ago. Similarly, trade, hotel, transport, communication and services related to broadcasting growth was also down to 4.8% in the second quarter from 6.9% a year ago.

Financial, real estate and professional services growth slowed to 5.8% in the Q2 FY2019-20 from 7% a year ago.

On the other hand, public administration, defence and other services reported improvement with an 11.6% rise during the quarter under review from 8.6% a year earlier.

On a half-yearly basis (April-September 2019), GDP growth came in at 4.8% as compared to 7.5% in the same period a year ago.

"GDP at constant (2011-12) prices in Q2 of 2019-20 is estimated at ₹35.99 lakh crore, as against ₹34.43 lakh crore in Q2 of 2018-19, showing a growth rate of 4.5 percent," an NSO statement said.

Gross Fixed Capital Formation (GFCF), which is barometer of investment, at constant (2011-2012) prices, estimated at ₹10.83 lakh crore in Q2 of 2019-20 as against ₹11.16 lakh crore in Q2 of 2018-19.

In terms of GDP, the rates of GFCF at Current and Constant (2011-2012) prices during Q2 of 2019-20 are estimated at 27.3% and 30.1%, respectively, as against the corresponding rates of 29.2% and 32.4%, respectively in Q2 of 2018-19.

"Growth rates of GFCF at Current and Constant Prices are estimated at (-) 0.9 percent and (-) 3.0 percent during Q2 of 2019-20 as compared to 16.2 percent and 11.8 percent during Q2 of 2018-19," it added.

Finance Minister Nirmala Sitharaman on Wednesday, in parliamentary debate, said the economy faced a slowdown but no "recession" and cited several government measures to support economic growth. On Thursday, she sought parliament's approval to spend an additional ₹21,000 crore this fiscal.

Some economists, however, said see economic growth picking up in the second half of the current fiscal year, after the government took steps to support real estate and non-bank finance companies.

Indian stock markets have been on a record-breaking rally this month in expectations of an economic recovery over the next few quarter.

Separately, India's infrastructure output contracted for the second consecutive month to 5.8% in October from a year earlier, lowest since at least April 2012, data released on Friday showed. During April-October, output grew 0.2% from the year-ago period, according to the data.

India's fiscal deficit in the first seven months through October stood at ₹7.2 lakh crore, or 102.4% of the budgeted target for the current fiscal year, government data showed today. Net tax receipts in the April-October period was ₹6.83 lakh crore, while total expenditure was ₹16.55 lakh crore. (With Agency Inputs)