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GDP Growth Rises Slightly to 4.7% in Third Quarter After Hitting 6-year Low

Although there is a slight increase in the GDP from the previous quarter, growth has slowed from 5.6% in the same quarter a year ago.

New Delhi| India’s gross domestic product (GDP) grew 4.7 per cent in October-December, keeping up with economists’ estimates, official data showed on Friday.

The National Statistical Office’s estimates on GDP growth in the nation come days after Finance Minister Nirmala Sitharaman said “green shoots” are visible in the economy, and at a time when the government has pegged the overall GDP growth of 5 per cent in the financial year ending March – the worst rate of annual expansion since the global financial crisis of 2008-09.

However, the growth in the October-December 2019 quarter has slowed from the economic growth of 5.6% registered in the same quarter a year ago.

The Gross Domestic Product (GDP) data released on Friday covered up to the end of last year before the Coronavirus outbreak in China sparked fears of a pandemic.

But analysts caution that growth would be muted this current quarter due to the downside risks to global growth as a result of the coronavirus epidemic, the full effects of which are still uncertain and unfolding. Goldman Sachs has cut its growth forecast to 4.9% for the March quarter from earlier estimate of 5.4%.

The government estimates economic growth in the current fiscal year ending in March to be at 5%, the lowest for 11 years, as compared to 6.1% in 2018-19.

And the government targets a slight recovery in growth to 6% for 2020/21.

Separately, data released today showed India’s infrastructure output grew 2.2% in January from a year earlier. During April-January, output rose 0.6% from the year-ago period, according to the data.

Infrastructure output, which comprises eight sectors such as coal, crude oil and electricity, accounts for nearly 40% of the country’s industrial output.

Also Read: More than 97% of construction workers don’t get minimum wages; Committee writes to PM Modi

Another set of data released today showed India’s fiscal deficit in the first 10 months through January stood at 9.85 lakh crore, or 128.5% of the revised budgeted target for the current fiscal year, government data showed on Friday.

The low rate of expansion in the economy seen in the December quarter was mostly an extension of the weak manufacturing, falling exports and weak consumer demand and private investment witnessed in the previous quarter against the backdrop of a global slowdown.

Gross value added (GVA) growth during the third quarter stood at 4.5 per cent, against 4.3 per cent in the July-September quarter this year and 6.3 per cent in the December quarter of FY19.

Reuters poll had on Thursday suggested that India’s economy might have fared slightly better in Q3 than the previous quarter. But it had warned that there could be a further drop in the final quarter of the financial year due to the impact of the outbreak globally.

Soumya Kanti Ghosh, chief economist at State Bank of India, had said, “although there are fewer cases of COVID-19 (Coronavirus) in India, the economic impact is expected to accrue from supply-chain risks”, citing problems in supply of raw materials from China for pharmaceuticals and other exports.

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