The financial year 2018-19 started with a bang by registering an 8.2% GDP growth rate in the April-June quarter. But experts had warned that a higher Gross Domestic Product (GDP) rate in Q1 was due to a favourable base effect, which will not be the case in rest of the quarters.
In the first quarter, India registered a GDP growth rate of 8.2% against 5.6% in the same quarter last year. Now, rating agency ICRA has estimated that the GDP growth is expected slow down to 7.2% in the July-September quarter but remain higher than 6.3% in the same quarter last year.
However, the good news is that both GDP and Gross Value Added (GVA) will outperform the year-ago levels of 6.3% and 6.1%.
“The sequential decline in the Y-o-Y GVA growth in Q2 FY19, compared to Q1 FY19, is expected to be led by industry (to 7.1% from 10.3%) and agriculture (to 3.5% from 5.3%), even as the momentum for the services sector is likely to improve (to 7.8% from 7.3%).” Aditi Nayar, Principal Economist, ICRA said.
GDP Q2 Estimates
- GDP: 7.2% vs 8.2%
- GVA: 7.1 vs 8%
- Industry growth: 7.1% vs 10.3%
- Agriculture growth: 3.5% vs 5.3%
- Services: 7.8% vs 7.3%
ICRA has said that the impact of higher input and fuel prices and a weaker rupee will be reflected in the GVA growth. “An uneven and sub-par monsoon, flooding in some areas amid a late withdrawal of the monsoon rains, and instances of crop damage and pest attacks are likely to result in muted agricultural growth,” Nayar said.
Service sector growth is expected to rebound to 7.8% in Q2 FY2019 from 7.3% in Q1 FY2019, led by a sharp pickup in the expansion in the Government of India’s non-interest revenue expenditure, a mild rise in growth of bank deposits, air and ports cargo traffic, as well as a moderation in the pace of FII outflows, Nayar added.
