The economy slowed in the July-September quarter due to sluggish farm sector performance and anaemic manufacturing growth, fuelling expectations of an interest rate cut and calls for implementing economic reforms to boost growth.
Data released by the Central Statistics Office (CSO) showed growth slowed to 5.3% in the July-September quarter compared to 6.7% expansion in the same year-ago period. It marked the slowest pace of expansion in three years and was below the 5.5% growth in the previous April-June quarter. Growth in the first half of 2012-13 stood at 5.4% compared to 7.3% in the year ago period. The finance ministry said the data was below its expectations. It attributed the sluggish growth in the farm and allied sectors to the lower than normal rainfall during June-July.
There were no surprises in the data as economists and financial market players had factored in slowing growth in July-September. This quarter witnessed a sharp slide in industrial growth, exports, investments and patchy rains hurt crops.
Real private consumption slowed to 3.7% year-on-year while the investment rate showed a minor uptick. But government consumption continues to be the biggest driver. India remains in the midst of a twin slowdown: private consumption and investment.
Driven by coal and petroleum refinery, eight core sector industries registered 8-month high growth of 6.5% in October, a trend that is in contrast to fall in country’s overall economic growth in July-September period.
Core sector industries had grown by a mere 0.4% in the same month last year.
Petroleum refinery products and coal production grew by 20.3% and 10.9%, respectively in the month under review. Steel output grew by 5.9%. Fertiliser and cement output increased by 2% and 6.8%, respectively.
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