GDP grows at a slower pace of 5.3% in Q2 of FY'15

India's economic growth slowed to 5.3 per cent in the July-September quarter of the current fiscal from the 5.7 per cent recorded in the April-June quarter of the 2014-15 financial year. The growth rate, however, was higher compared to the 5.2 per cent growth in the year-before quarter, official data released by the Central Statistics Office on Friday showed.

The year-on-year improvement in GDP growth in the second quarter this fiscal is attributed to better performance of the community and social services sector. Manufacturing continued to disappoint with negligible growth of 0.1 per cent in July-September 2014-15 against the 1.3 per cent growth in the second quarter of last fiscal.

GDP at factor cost at constant (2004-05) prices for Q2 of 2014-15 is estimated at Rs14,39,000 crore against Rs13,66.000  crore in Q2 of 2013-14, showing a growth rate of 5.34 per cent over the corresponding quarter of the previous year.

The 5.3 per cent growth in GDP in Q2 of 2014-15 owes much to significant growth recorded by 'electricity, gas and water supply' (8.7 per cent), 'construction' (4.6 per cent), 'community, social and personal services' (9.6 per cent) and 'financing, insurance, real estate and business services' (9.5 per cent). Economic activities like 'agriculture, forestry and fishing' (3.2 per cent), 'mining and quarrying' (1.9 per cent), 'manufacturing' (0.1 per cent) and 'trade, hotels, transport and communication' (3.8 per cent) recorded slower growth in this period.

Latest available estimates on the index of industrial production (IIP), mining, manufacturing and electricity sectors recorded growth rates of 1.3 per cent, 0.1 per cent and 9.4 per cent, respectively, in Q2 of 2014-15. The key indicators of construction sector, namely, production of cement and consumption of finished steel registered growth rates of 9.8 per cent and 0.3 per cent, respectively in Q2 of 2014-15.

In the service sector, key indicators of railways, namely, the net tonne kilometers and passenger kilometers have shown growth rates of 6.3 per cent and 1.1 per cent, respectively, in Q2 of 2014-15. 

In the transport sector, sale of commercial vehicles, cargo handled at major ports, cargo handled by the civil aviation and passengers handled by the civil aviation registered growth rates of (-) 3.8 per cent, 4.3 per cent, 11.6  per cent and 12.6 per cent, respectively, in Q2 of 2014-15 over Q2 of 2013-14. Total stock of telephone connections, including (wireline and wireless) recorded growth of 6.5 per cent in Q2 of 2014-15. The other key indicators, namely, aggregate bank deposits and bank credits have shown growth rates of 13.1 per cent and 10.1 per cent, respectively, as of September  2014-15.

Growth in the second quarter of the current financial year has been broadly on the expected lines, according to the finance ministry.

The minister estimated a lower growth in agriculture sector in view of lower than expected monsoon in the current year vis-à-vis a good monsoon in 2013-14. Similarly, in view of slower growth of IIP in the second quarter vis-à-vis the first quarter and in particular the manufacturing component, a lower growth in industry sector vis-à-vis the first quarter is not surprising, the ministry added.

The ministry observes that the overall and sectoral growth rates in second quarter for 2014-15 are lower than what was observed in the first quarter except for the service sector, where the growth has been little higher than in the first quarter. Further, the ministry said, this has been on account of an improvement in trade, hotels, transport and communication services as well as community, social and personal services.

It may be mentioned that the Economic Survey 2013-14 had predicted that the growth of GDP to be in the range of 5.4 to 5.9 per cent. In the first half of the year the growth has been 5.5 per cent, which is broadly in line with the projections as well as the expectations, the ministry added.