India's GDP slows down to 7.1% in September quarter, massive fall from 8.2% in Q1

In a set back to the Narendra Modi government months before the Lok Sabha elections, India's gross domestic product (GDP) growth rate slowed to 7.1 per cent in the July-September quarter, weakening from 8.2 per cent in the previous quarter. The rate of economic growth in the same quarter last year had been 6.3 per cent. Indian GDP still remained ahead of China to retain the tag of the world's fastest growing major economy.

The GDP at constant prices (2011-12) had grown at 6.3 per cent in July-September quarter of the last fiscal, according to government data released on Friday. The size of the GDP in the second quarter of 2018-19 is estimated at Rs 33.98 lakh crore, as against Rs 31.72 lakh crore a year ago, showing a growth rate of 7.1 per cent, as per a statement of the Central Statistics Office (CSO).

Indian economy grew at 8.2 per cent in April-June quarter of this fiscal. The GDP growth was 7.7 per per cent in January-March quarter while it was at 7 per cent in October-December. The Chinese economy had expanded at the rate of 6.5 per cent in the July-September period this year.

India's GVA (gross value added) at Constant (2011-2012) Prices for second quarter this fiscal is estimated at Rs 31.40 lakh crore, as against Rs 29.38 lakh crore year ago, showing a growth rate of 6.9 percent over the corresponding quarter of previous year. The CSO said mining and quarrying output has declined by 2.4 per cent in the quarter from a growth of 6.9 per cent in year ago period.

However, the manufacturing activities expanded at the rate of 7.4 per cent in the quarter under review up from 7.1 per cent in the year ago quarter. The construction sector too showed an improvement by recording a growth of 7.8 per cent as against 3.1 per cent earlier.

The farm sector too grew at a higher rate of 3.8 per cent in the quarter as against 2.6 per cent a year ago.

The Finance Ministry said the 7.1 per cent growth in July-September quarter is "reasonable" as the economy faced the challenge of higher oil prices and weak rupee during the three month period.  Economic Affairs Secretary Subhash Chandra Garg, however, said that even though the September quarter GDP growth "seems disappointing", a 7.6 per cent growth in the April-September period is "quite robust and healthy" and shows that India still has the highest growth rate in the world.

"GDP growth for second quarter 2018-19 at 7.1 per cent seems disappointing. Manufacturing growth at 7.4 per cent and agriculture growth at 3.8 per cent is steady... Mining at -2.4 per cent reflect monsoon months deceleration," Garg tweeted.

The ministry in a statement said: "The second quarter has seen a reasonable overall GDP growth of 7.1 per cent. The growth is on higher base compared to the growth of the first quarter".

It said the July-September quarter faced the challenge of higher oil prices resulting in much higher import bill and the weakening of the rupee. "The Indian Economy is on track to maintain a high growth rate in the current global environment," the ministry said. 

(With PTI inputs)