India’s third-quarter growth decelerated to 4.7%, the slowest pace in about seven years, as a slump in manufacturing weighed on overall economic momentum.
The Centre, however, asserted that the slowdown had bottomed out, with Economic Affairs Secretary Atanu Chakraborty citing a recent uptick in core sector output as a sign of things to come.
On Friday, the National Statistical Office released data showing that Gross Domestic Product expanded by 4.7% in the quarter ended in December 2019, compared with 5.6% in the year-earlier period.
“We have already bottomed out,” Mr. Chakraborty told journalists after the data was released. “Sustained improvement in agriculture and services continue to drive growth. The turnaround in growth in the eight core sector industries index in December 2019 and January 2020 also augurs well for the manufacturing sector,” he added. These core industries showed a growth of 2.2% in January, according to data released by the Commerce Ministry on Friday.
Asked about the possible fallout that the coronavirus outbreak in China , which now threatens to affect an increasing number of countries, could have on India’s economy , he said it was an “unfolding story” and refused to speculate on the likely impact.
The NSO also released the second advance estimates, projecting a GDP growth of 5% for 2019-20, in comparison with 6.1% in 2018-19. The projection remains unchanged from last month.
However, the NSO revised upward its GDP growth estimates for the first two quarters of the current fiscal year: Growth in the first quarter of 2019-20 was pegged at 5.6%, higher than its earlier estimate of 5%. For the second quarter too, it increased the estimate to 5.1%, from 4.5%.
According to senior Finance Ministry officials, the government’s increased spending, especially on infrastructure, had helped spur a modest economic recovery. They also saw positive signs in foreign direct investment, mining and agriculture, and claimed an improvement in demand on the ground in rural areas.
The impact from last year’s corporate tax rate cut on investments could not be judged at this point, said a senior official, terming it a “long-term, generational, structural” change that could take years to pay off.
