GDP growth slows again in third quarter

Govt. cuts FY19 growth estimation to 7%; Q3 growth estimated at six-quarter low; agriculture, manufacturing contribute to slowdown

GDP growth slowed for the third consecutive quarter in the October-December 2018 period, according to data delivered on Thursday. Growth fell to 6.6% in the third quarter, the lowest in the last six quarters.

The slowdown was led by agriculture, which is estimated to grow at 2.7%, against the earlier view of 3.8%.

Data revealed that the GDP growth slowed for the third consecutive quarter in the quarter ended December 2018 to 6.6% — a six-quarter low — from 7% in the second quarter and 8% in the first quarter of this financial year.

The slowdown in 2018-19 is due to a lowering in the growth approximation of the agriculture sector to 2.7% as per the latest data compared with the 3.8% estimated earlier. The manufacturing sector, too, is expected to grow at a marginally lower 8.1% compared with the previously predicted 8.3%.

“FY19 GDP growth in second advance estimate of national income is lowered to 7% from 7.2% in first advance estimate,” Devendra Kumar Pant, chief economist, India Ratings and Research, told.

“The primary reason for this is the upwards revision in FY18 GDP growth rate in the first revised estimate [released on January 31, 2019] to 7.2% from 6.7% earlier.”

The two notable divergences between the second approximation and the first are that private final consumption expenditure growth has been revised upwards to 8.3% from 6.4% and investment growth was revised lower to 10% from the earlier estimate of 12.2%.

The government revised downwards its estimate for GDP growth in the 2018-19 financial year to 7% from the 7.2% estimated in the first estimate for the year issued in January.