India's GDP rate disappoints, down from 8.2% in Q1 to 7.1% in Q2

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India's latest Gross Domestic Product (GDP) growth figures came as a disappointment after it came down from 8.2%, registered in the first quarter (April-June) of the year 2018, to 7.1% in the second quarter (July-September). The present GDP figures do not meet the market expectations even though the union government said that 7.1% represents a sizable jump from last year's Q2 growth rate estimates of 6.3%, indicating sustained acceleration in India's economic growth.

"The growth rate estimates of GDP at Constant Prices for July-September 2018 stand at 7.1%. These estimates represent a sizable jump from last year's Q2 growth rate estimates of 6.3%, indicating sustained acceleration in India's economic growth," the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation said on Friday.

It added that the CSO estimates state that GDP at constant prices was Rs. 33.98 lakh crores for Q2, 2018-19, which is a marked increase from of Rs. 31.72 lakh crores and Rs. 29.79 lakh crores for the same period in 2017-18 and 2016-17, respectively.

The combined Index of 8 core industries stood at 134.8 in October, 2018, which was 4.8% higher as compared to the index of October, 2017. Its cumulative growth during April to October, 2018-19 was 5.4%.

The agriculture growth slowed to 3.8% in Q2 2018 compared to 5.3% in the first quarter. This was 2.6% in Q2 of 2017-18. According to Agriculture Ministry the production of food grains during the Kharif season of agriculture year 2018-19 grew by just 0.6% as compared to growth of 1.7% during the same period last year. Electricity (9.2%), trade and hotels (6.8%) and public services (10.9%) showed a rise even as construction (7.8), finance and real estate (6.3) showed a decline. The total GVA at basic prices came down from 8% in Q1 to 6.9% in Q2.

However, Dr. Bibek Debroy, Chairman of the Economic Advisory Council to Prime Minister (EAC-PM), termed the latest figures as a positive development and attributed this to government's successful policy efforts in maintaining a stable domestic environment despite global uncertainties. He stated that the government's focus on simplifying India's business and investment eco-system, complimented by its initiatives to make growth more equitable and inclusive has greatly improved India's economic health in the recent past.

Debroy added that despite international trade tensions and volatile crude oil prices, India's strong economic fundamentals continue to provide the much-needed thrust for it to be a major global driver of economic growth. The robust growth rates in sectors such as manufacturing and construction show that the growth momentum continues to be broad based. He said the encouraging growth figures along with continued empowerment of the economically disadvantaged through programs such as last mile electricity connectivity and housing for all, are positive signs for India's economic prospects in the coming quarters.