Slow 7.1% Q2 GDP growth on policy uncertainty, experts disappointed

The rate of economic growth in the same quarter last year had been 6.3%

manufacturing,GDP, factory, PMI — A worker uses a welding torch to weld an iron machine at the construction site of a flyover in New Delhi. Photo: Reuters.

Last Updated : Nov 30 2018 | 6:35 PM IST

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, just as Prime Minister Narendra Modi-led central government gets set for the Lok Sabha elections next year. The rate of economic growth in the same quarter last year had been 6.3 per cent.

Subash Chandra Garg, Secretary, Department of Economic Affairs, said that the Gross Domestic Product (GDP) growth in the second quarter of 2018-19 was disappointing, however, he said that half-year growth at 7.4 per cent was robust and healthy.

Rupa Rege Nitsure, Group Chief Economist, L&t Finance Holdings Mumbai

"The GDP numbers are spot on in terms of what I had expected. There is an acute slowdown in demand and the numbers are reflecting what we have been feeling around us for some time now. Demand is slowing down at a faster clip in rural areas than urban areas. I expect the government to take growth-boosting steps as well as rate cuts by the monetary policy committee in the January-March quarter, as inflation has crashed with food prices falling. The risks of elevated oil prices and rupee depreciation are also controlled. There is rural distress. Both the government and the RBI (Reserve Bank of India) should focus on boosting growth. I expect the full-year (April-March) GDP growth at 7.2 per cent."

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Madhavi Arora, Economist, Edelweiss Securities, Mumbai

"Second-quarter growth data has surprised us on the downside and pose downward risk to overall 7 per cent + GVA growth in FY19. The second half of FY19 will likely see further slower growth on the back of unfavourable base effect and slower non-banking credit offtake and tighter financial conditions amid NBFC (non-banking financial company) stress."

"Besides, ahead of national elections, the investment cycle will continue to be fragile as policy uncertainty lingers. However, higher election-related spending could counter some of this growth moderation."