Economy grows mere 5.3% in Q2
While a worried government chose to restrict its comment, saying only that the growth rate was below its expectations, key growth drivers—private and government consumption and gross fixed capital formation (GFCF)—portrayed a mixed picture, making it difficult for economists to see a bottoming out as yet, and pitch for more radical reforms. Analysts were divided on whether the RBI would cut interest rates in December in the light of the latest data.
The manufacturing sector grew a disconcerting 0.8% in Q2, while farm output rose just 1.2%. Although the service sector’s growth—the only push-factor—was more or less sustained, sectors like construction, electricity shed some of the growth momentum. The growth in services slowed to 7.2% in Q2, compared with 8.8% a year before, while the industrial segment as a whole, including manufacturing, mining and power generation, expanded 2.8% in the last quarter.
In a positive development, gross fixed capital formation (GFCF) grew at an annual 4% in Q2, an improvement over the previous three quarters but still much lower than the 9-10% in the boom years and a low-base-enabled 15% in the first quarter of the last fiscal. Private consumption remained sluggish with annual growth rate of 3.7%, even lower than 4%
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