Economic growth rose slightly to 7.3% in the second quarter of the current financial year from 7.1% in the first quarter and that too when it was pushed up by the government expenditure.
The growth was lower than expected 7.5% for the second quarter and 7.6% registered in July-September of 2015-16, which may propel RBI to cut the policy rate in its December review as inflation is also benign.The data indicate that the economy may witness the heavy impact of demonetisation in the third quarter and even some part of the fourth quarter. The growth declined to 7.2% in the first half of the current financial year against 7.5% in the corresponding period of the previous financial year. Among various segments, it was mainly agriculture which showed some improvement. The farm sector rose 3.3% in the second quarter against 1.1% in the first quarter. Growth fixed capital formation declined in the second quarter, which is not good indication for the growth in the coming quarters. The other one was the government-backed public administration, defence and other services which expanded by 12.5% against 12.3%.