GDP growth slows down to 7.1% in September quarter

GVA serves as a more realistic proxy to measure changes in the aggregate value of goods and services produced in the economy.

The growth in India's real or inflation-adjusted gross domestic product (GDP) in April-June, however, is also partly because of a favourable "base effect," magnifying the expansion pace in the broader economy.

The manufacturing sector grew 7.4 percent in July-September, slowing down considerably from 13.5 percent expansion in the previous quarter and 7.1 percent a year ago.

The agriculture sector fell to 3.8 percent during July-September from 5.3 percent in the previous quarter and 2.6 percent a year ago.

The deceleration in the farm sector could be partly because of a patchy distribution of the monsoon rains, flooding in some areas as well as late withdrawal of rains from some regions, damaging crops.

"GDP growth for second quarter 2018-19 at 7.1 percent seems disappointing. Manufacturing growth at 7.4 percent and agriculture growth at 3.8 percent is steady. Construction at 6.8% and mining at -2.4% reflect monsoon months’ deceleration. Half year growth at 7.4 percent is still quite robust and healthy," economic affairs secretary Subhash Chandra Garg tweeted.

Mining sector witnessed negative growth of (-) 2.4 percent in the quarter ended September from 6.9 percent a year ago and 0.1 percent in April-June. Similarly, trade, hotels, transport, communication and services related to broadcasting grew at 6.8 percent July-September as compared with 8.5 percent jump during the same period a year ago.

Public administration, defence and other services shot up, growing 10.9 percent in quarter ended September from 6.1 percent a year ago and 9.9 in the last quarter.

The latest GDP data comes two days after the NITI Aayog and the Central Statistics Office (CSO) released on November 28 the 'back-series' of India’s gross domestic product (GDP) data from 2005-06, using a new methodology, that shaved off the previous growth estimates by a few percentage points in several years.

The new data showed that the Indian economy did not grow at a scorching pace during the erstwhile UPA government's years as it was earlier made out to be.

The data has triggered a raging debate over the formula with the Congress accusing the government of manipulating data.

Private consumption seems to be improving. Private final consumption expenditure (PFCE), in inflation-adjusted prices — a gauge to measure changes in household spending — grew 7.01 percent in July-September to Rs 18.51 lakh crore from Rs 17.30 lakh crore in the same quarter last year.

The national income data also showed that government final consumption expenditure (GFCE) or government expenditure grew 12.67 percent at constant prices during the quarter-ended September to Rs 4.21 lakh crore from Rs 3.74 lakh crore during the same quarter a year ago.

Gross Fixed Capital Formation (GFCF), a useful metric to measure corporate investment activity, witnessed a double digit growth in the third consecutive quarter, growing 12.46 percent in quarter ended September.

"On the whole therefore second quarter GDP numbers do not ring in any alarm or indicate any serious deviation from the expected growth numbers. No doubt the sudden spurt in crude oil prices and depreciation in rupee had somewhat destabilising impact on the economy lately but over the past month they have corrected equally fast," said Devendra Kumar Pant, Chief Economist at India Ratings said.