India's Gross Domestic Product (GDP) growth witnessed a 26-month low of 4.5 percent in the July-September quarter this year. It stood at five percent in the previous three months (April-June).
This is a steep decline compared with the seven percent growth recorded in the same period in 2018.
According to the statistics released by the Indian government on Friday, the decline in growth was seen in almost every key sector. The farm sector registered just 2.1 percent growth in July-September, against 4.9 percent in the same period last year. The manufacturing sector contracted by one percent, compared with 6.9 percent growth it registered in the previous year. The mining, construction, and electricity sectors, too, experienced a steep fall.
After the release of the data, Indian Economic Affairs Secretary Atanu Chakravarty said, “There will be an uptick in growth numbers in coming quarters. We expect uptick in consumption and investment. We have certainly bottomed out”.
Voicing a similar view, Chief Economic Adviser in the Ministry of Finance K. Subramanian said, “Chief economic fundamentals remain strong. Expect GDP growth to pick up from the third quarter”.
Some economists, however, fear a contrary economic scenario in the upcoming quarters. “We believe growth could weaken further to 4% in the third quarter of the current financial year, which will mark the trough”, said Nikhil Gupta, the chief economist of equity advisory firm Motilal Oswal.
“Q2 GDP at 4.5% indicates a slump in the economy and it has become quite pronounced after a slip to 5% in first quarter”, said Joseph Thomas, the head of research at Emkay Wealth Management, an investment consultant organisation.
The Indian government also released core sector data, which indicated that eight core infrastructure industries had contracted by 5.8 percent in October. Six of the eight core sector industries contracted, indicating a deep economic slowdown in the country. Coal, crude, natural gas, steel, cement, and electricity registered a decline in output in the month of October.