New Delhi: India’s economic growth in the October-December quarter of the 2018-2019 financial year (FY) was the slowest recorded in five quarters, government data released on Thursday evening has revealed.
The gross domestic product (GDP) for the FY rose by 6.6% in the third quarter on the back of lower consumer spending and slightly less growth in the agricultural and manufacturing sectors.
In the first and second quarters, the GDP growth was recorded at 8.2% and 7.1%, which were revised downwards on Thursday to 8% and 7% respectively.
Slower growth in the third quarter, along with the downward revisions for the first and second quarters, has brought down the overall projection for growth in 2018-2019 to 7% from the earlier estimate of 7.2%.
In GVA (gross value added) terms, the Indian economy grew at 6.3% in Q3 FY’19.
Statistics ministry data also showed that the growth decline was also impacted by a slowdown in investments and consumer spending.
According to Reuters, consumer spending, which accounts for almost 60% of the economy, “slowed to an 8.4% rise annually in Q3, compared to a revised 9.9% rise in the previous quarter”.
Gross fixed capital formation – which include infrastructure spending – rose 10.6% compared with a revised 10.2% annual increase in the previous quarter.
Table – 1 India’s Economic Growth Trends Over Past Quarters
| Financial Quarter | GDP Growth | GVA Growth |
| Q2 FY’18 | 6.3% | 6.1% |
| Q3 FY’18 | 7.0% | 6.6% |
| Q4 FY’18 | 7.7% | 7.6% |
| Q1 FY’19 | 8.2%* | 8% |
| Q2 FY’19 | 7.1%* | 6.9% |
| Q3 FY’19 | 6.6% | 6.3% |
*These figures have now been revised. (See Table 2)
Table – 2 – Revisions in Quarterly GDP Data
| Financial Quarter | Earlier GDP Growth | Revised GDP Growth |
| Q1 FY’19 | 8.2% | 8.0% |
| Q2 FY’19 | 7.1% | 7.0% |
Rupa Rege Nitsure, group chief economist at L&T Finance Holdings said in a statement, “I had expected the overall GDP growth for FY19 to get revised downwards, as the farm sector had suffered due to extremely uneven rainfall, depleted water reservoir levels in key agrarian states and their impact on sowing of foodgrains.”
“Manufacturing and small services too had slowed due to a crisis of confidence for the NBFC sector during September to December 2018. The GDP data has correctly captured these events that had impacted growth. In retrospect, the RBI’s policy actions on February 7 get strongly vindicated,” Nitsure added.
According to the government’s figures, the agriculture sector grew at 2.7% in Q3 compared to 4.2% in Q2, while manufacturing grew at 6.7% in Q3 compared to 6.9% in Q2.
(With Reuters inputs)
