India's GDP growth slows down to 7.1% in Sept quarter

India's economy grew at 7.1 per cent for the second quarter of the current fiscal losing the momentum sequentially from the first quarter when it grew at a nine-quarter high of 8.2 per cent on the back of increase in investment and consumption demand in the economy.A Reuters poll had forecast that the economic growth had likely moderated to 7.4 per cent in the July-September period.The GVA growth for Q2 came in at 6.9 per cent. The manufacturing output grew at a robust 7.4 per cent on the back of a stronger industrial output. The data, released by the Central Statistics Office, comes days after a joint exercise of CSO and NITI Aayog revised downwards the GDP growth for the UPA years between 2005-06 and 2011-12 based on the new base year 2011-12.The Narendra Modi-led NDA government is preparing to go into general elections next year on the back of a stronger economic growth compared to the UPA era.The first quarter GDP growth was mainly driven by robust growth in gross fixed capital formation (GFCF) as it expanded by double digits for the second consecutive quarter (Q4FY18 and Q1FY19) and a pick up in demand in the rural sector.The RBI, in its last monetary policy framework, had projected the GDP growth for 2018-19 at 7.4 per cent (7.4 per cent in Q2 and 7.1-7.3 per cent in H2).The second half could see moderation in economic growth on the back of a liquidity crisis and a likely credit crunch triggered by the crisis in India's shadow banking sector. The economy could see support from the RBI's likely move to hold back any further hike in interest rates as the inflation is expected to remain within its comfort zone on the back of a sharp decline in international crude oil prices.

from Economic Times https://ift.tt/2P5lWY9