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The growth estimates for the July-September quarter from the Central Statistics Office show that the economy’s expansion predictably slowed. GDP growth weakened to 7.1%, from the robust 8.2% in April-June, as rising oil prices combined with a weakening rupee to dampen demand.
Gross value added (GVA) data show five of the eight sectors reflecting the slowdown from the first quarter, with only utility services, public administration, defence and other services, and trade, hotel, transport, communication and broadcasting services bucking the trend. Worryingly, GVA growth in agriculture, forestry and fishing eased to 3.8%, from 5.3% three months earlier, as foodgrain output in the kharif season inched up a mere 0.6% (production had expanded by 1.7% in the previous year). Given the distress in the farm sector, below-normal monsoon rains and a shortfall of over 8% in rabi sowing till November 30, the outlook for rural demand remains challenging at least for the next couple of quarters.
This demand weakness in the hinterland is also evident in the consumption spending data, with growth in private final consumption expenditure slowing to 7%, compared to 8.6% in the first quarter. Manufacturing, though posting a 7.4% expansion, also poses cause for concern as the momentum almost halved from the June quarter’s 13.5% and slipped back nearer to the year-earlier level of 7.1%. Index of Industrial Production data reveal that growth in manufacturing output remained becalmed at 4.6% through August-September, and when seen alongside the weakness in car and two-wheeler sales, suggest an acceleration may be some time away.
Source : https://www.thehindu.com/todays-paper/tp-opinion/slowdown-signals/article25650631.ece
