GDP growth tanks to 4.5% in Q2; core industries' output shrinks 5.8% in Oct

Fiscal deficit in the first seven months of FY20 already at 102% of government's target for full financial year

India’s annual growth in gross domestic product in the July-September quarter of FY20 declined to 4.5%, compared with 7.1 per cent in the same quarter last year, government data showed on Friday. This was the lowest level for GDP growth since of January-March quarter of FY13.

The low rate of expansion was mainly on account of a weak manufacturing, subdued farm sector activity, and a drop in exports due to a global slowdown.

According to the data released by the National Statistics Office, growth in gross value added, or GVA, in the manufacturing sector contracted by 1 per cent in the September quarter, compared with an expansion of 6.9 per cent last year.

Similarly, farm sector GVA growth remained subdued at 2.1 per cent, down from 4.9 per cent in the year-ago period.

What’s more? Output of eight core infrastructure industries contracted by 5.8 per cent in October, indicating the severity of the economic slowdown, showed another set of data released on Friday. The rate of contraction in October was higher than the 5.2 per cent seen the previous month.

Among the eight core industries, coal production fell steeply by 17.6 per cent, crude oil by 5.1 per cent, and natural gas by 5.7 per cent, and electricity by 12.4 per cent.

The only sector that posted growth in October was fertilisers, where production increased by 11.8 per cent year-on-year. Growth in output of refinery products slowed down to 0.4 per cent in October, against 1.3 per cent in the same period last year.

The eight core sectors had expanded by 4.8 per cent in October 2018.

Talking of GDP, the decline in rate of expansion in the September quarter was in line with economists’ expectations. The economists Business Standard had spoken to earlier had concurred that Q2 GDP growth would be between 4.2 per cent and 4.7 per cent, slower than the 5 per cent in Q1.

In another sign of pain in the economy, official data released on Friday also showed that...

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