After growing at an almost four-year high of 8.2 per cent in the first quarter of the current fiscal year, India’s economic growth slowed to 7.1 per cent in the second quarter. As seen in Chart 1, gross value added (GVA) also slumped to 6.9 per cent in Q2FY19, down from 8 per cent in the previous quarter.
Growth in the second quarter has come in below the Reserve Bank of India’s (RBI’s) estimate of 7.4 per cent. As seen in Chart 2, the RBI had earlier projected growth to subsequently dip to 7.1 per cent in Q3 and further to 6.9 per cent in Q4.
Almost all major sectors of the economy saw a moderation in growth. As seen in Chart 3, GVA by agriculture slipped to 3.8 per cent in Q2 from 5.3 per cent earlier. Similarly, as shown in Chart 4, GVA by mining, manufacturing and construction grew at a slower pace in the second quarter as compared to the previous quarter.
Growth was driven by public administration, defence and other services. The sector, which largely connotes government spending, grew by a robust 10.9 per cent in Q2, up from 9.9 per cent in Q1 (Chart 5).
As seen in Chart 6, trade, hotels, transport and communication remained range-bound, even as financial services dipped marginally in the second quarter.
On the expenditure side, the data show that private consumption expenditure moderated to 7 per cent in Q2 from 8.6 per cent earlier (Chart 7). But on a positive note, gross fixed capital formation (GFCF), which connotes investment in the economy, grew at a robust 12.5 per cent in Q2, up from 10 per cent previously (Chart 8). As a share in GDP, GFCF has now risen to a nine-quarter high.
StatsGuru is a weekly feature. Every Monday, Business Standard guides you through the numbers you need to know to make sense of the headlines; Compiled by BS Research Bureau