Economic growth slows to 7% in April-June quarter

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New Delhi: Reflecting a muted performance, the GDP growth slowed to 7 percent in the April-June quarter, from 7.5 percent in the previous quarter, amid deceleration in farm, services and manufacturing sectors.

A slower GDP growth, along with slower pace of industrial production expansion, however bolsters the case for a rate cut by the Reserve Bank.

The Gross Value Added (GVA), a new concept introduced by CSO to measure the economic activity, also slipped during the first quarter to 7.1 percent, from 7.4 percent a year ago.

The GDP grew at 7.5 percent in the January-March quarter while it was 6.7 percent in the April-June quarter last year, according to data from the Central Statistics Office (CSO).

The nominal GDP and GVA at current market price showed a steep decline in the quarter under review. The nominal GDP slipped to 8.8 percent in Q1 from 13.4 percent a year ago while the GVA growth rate nearly halved to 7.1 percent from 14 percent a year ago.

The government towards the beginning of the fiscal has projected a growth rate of 8.1-8.5 percent in the current fiscal, which may be difficult to achieve.

RBI, which has cut interest rate by 0.75 percent in three tranches since January, is scheduled to announce the next bi-monthly policy on September 29.

The data showed that the manufacturing sector GVA at constant prices (2011-12) rose 7.2 percent in the April-June quarter as against 8.4 percent in the year-ago period.

Similarly, the growth in the output of electricity, gas, water supply and other utility services decelerated sharply to 3.2 percent as against 10.1 percent a year earlier.

The farm and allied sectors grew at 1.9 percent, down from 2.6 percent in the previous year.

The output of mining and quarrying sector too slipped marginally to 4 percent, from 4.3 percent a year ago.

Financial, real estate and professional services growth shrank to 8.9 percent as against 9.3 percent a year earlier.

However, the construction activity registered an increase of 6.9 percent, up from 6.5 percent in the previous year.

According to the CSO data, GDP at constant (2011-12) prices in Q1 of 2015-16 is estimated at Rs 27.13 lakh crore, as against Rs 25.35 lakh crore in Q1 of 2014-15, a growth of 7 percent.

Quarterly GVA at basic price at constant (2011-2012) prices for Q1 of 2015-16 is estimated at Rs 25.80 lakh crore, as against Rs 24.10 lakh crore in Q1 of 2014-15.

The GDP figure is derived by adding taxes and net subsidies to GVA at basic prices.

GDP at current prices in Q1 of 2015-16 is estimated at Rs 32.43 lakh crore, as against Rs 29.80 lakh crore in the same period a year ago, a growth rate of 8.8 percent.

GVA at Basic Price at current prices in the said period is estimated at Rs 30.30 lakh crore as against Rs 28.28 lakh crore last year, showing an increase of 7.1 percent.

According to the data, the Gross Fixed Capital Formation (GFCF) at current prices is estimated at Rs 9.02 lakh crore in the said period as against Rs 8.69 lakh crore in Q1 of 2014-15.

At constant (2011-12) prices, GFCF is estimated at Rs 8.07 lakh crore in Q1 of 2015-16 as against Rs 7.70 lakh crore in Q1 of 2014- 15.

In terms of GDP, the rates of GFCF at current and constant (2011-12) prices during the first quarter are estimated at 27.8 percent and 29.8 percent, respectively, as against the 29.2 percent and 30.4 percent, respectively, in the June quarter of 2014-15.

Government Final Consumption Expenditure (GFCE) at current prices is estimated at Rs 3.86 lakh crore in the first quarter as against Rs 3.71 lakh crore in the year-ago period.

Government Final Consumption Expenditure (GFCE) at current prices is estimated at Rs 3.86 lakh crore in the first quarter as against Rs 3.71 lakh crore in the year-ago period.

At constant (2011-12) prices, GFCE is estimated at Rs 3.10 lakh crore in Q1 of 2015-16 as against Rs 3.06 lakh crore a year ago.

In terms of GDP, rates of GFCE at current and constant (2011-12) prices during the June quarter are estimated at 11.9 percent and 11.4 percent, respectively, as against the 12.4 percent and 12.1 percent in the same quarter a year earlier.

Private Final Consumption Expenditure (PFCE) at current prices is estimated at Rs 19.89 lakh crore in Q1 of 2015-16 as against Rs 18.10 lakh crore last year.

At constant (2011-12) prices, PFCE is estimated at Rs 15.93 lakh crore in the period under review as against Rs 14.84 lakh crore in Q1 of the previous year.

In terms of GDP at market prices, the rates of PFCE at current and constant (2011-12) prices during Q1 are estimated at 61.3 percent and 58.7 percent, respectively, as against 60.7 percent and 58.5 percent in Q1 of 2014-15.

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