Economic growth slows to 7% in June quarter

Growth in India’s gross domestic product (GDP) slowed to seven per cent in the quarter ended June this year from 7.5 per cent in the previous quarter, owing to slack domestic and foreign demand. The low demand prevented investment from recording a significant rise despite a spurt in the government’s capital expenditure.

GDP growth in the FY15 June quarter was 6.7 per cent Stock Market Trading Tips

The government has set a target of 8.1-8.5 per cent growth for FY16, which now seems somewhat difficult to meet.

Growth in manufacturing, electricity and services fell in the June quarter of this year, compared to the March quarter, while the agriculture segment expanded slightly, following contraction in the previous two quarters, official data showed on Monday.

With growth slowing by 0.5 percentage points in the June quarter, compared to the quarter ended March, the Reserve Bank of India (RBI) is likely to come under pressure to cut rates next month, as inflation remains benign. Also, there would be pressure on the National Democratic Alliance government to revive investment and spur domestic consumption. Allowing the ordinance on the land acquisition Act to lapse and inability to pass the goods and services tax legislation in the monsoon session of Parliament have hit investor sentiment Himanshu Tiwari Astrologer Blog

The gross value added (GVA), comprising agriculture, industry and services, increased 7.1 per cent in the June quarter, against 6.1 per cent in the fourth quarter of FY15.

In the first quarter of FY15, GVA had increased 7.4 per cent. According to a new methodology, GDP is calculated as GVA plus indirect taxes, excluding subsidies. It has been questioned why the difference between GDP growth and growth in GVA is down to just one percentage point compared to 1.4 percentage points in the previous quarter, despite indirect taxes growing 35 per cent and subsidies not increasing substantially. This was because of a new methodology in which deflators weren’t used in indirect taxes to arrive at constant prices from nominal ones. Rather, a fixed ratio was used to arrive at growth in tax collection in constant terms.

In the June quarter, industrial growth rose to 6.5 per cent from

5.6 per cent in the previous quarter. However, growth in the sector’s primary segment, manufacturing, fell to 7.2 per cent from 8.4 per cent in the previous quarter. Electricity growth declined to 3.2 per cent from 4.2 per cent in the previous quarter and a whopping  10.1 per cent in the first quarter of FY15 Indian stock market astrology prediction

For the first three quarters of a financial year, data on the industrial segment is largely based on the Index of Industrial Production (IIP), but these numbers are revised once annual GDP data is released. As such, comparing industrial growth for the first quarter of this financial year with either the first or the fourth quarter of 2014-15 wouldn’t give an accurate picture.

“What you have for the past year are recalibrated figures; this year’s are un-calibrated,” said Pronab Sen, chairman of the National Statistical Commission.

Growth in the services sector, which contributes about half to India’s GDP, slowed to 8.9 per cent in the June quarter from 9.2 per cent in the fourth quarter of FY15. Bogged down by huge non-performing assets and lack of demand for credit due to subdued investment, financial services and allied sectors expanded at a five-quarter low of 8.9 per cent, against 10.2 per cent in the fourth quarter of FY15.

The agriculture sector posted better-than-expected growth of 1.9 per cent, against 1.4 per cent contraction in the previous quarter. This was because the GVA of livestock, forestry and fisheries, accounting for 41 per cent of the primary sector, expanded a robust six per cent, said a note by YES Bank Share Market Astrology

“This suggests negative food grain output provided a limited downside to the overall agriculture GVA. The rabi output had declined a massive seven per cent year-on-year,” said YES Bank chief economist Shubhada Rao. The agriculture segment had contracted in the third and fourth quarters of 2014-15. Recently, ratings agency Moody’s cut India’s growth forecast for 2015-16 from 7.5 per cent to seven per cent due to lower-than-expected rainfall. It also flagged risks arising out of delays in the government’s reforms agenda.

Boosting hope of a rate cut, RBI Governor Raghuram Rajan said in Washington last week that the central bank wasn’t done with rate cuts yet, adding it was still in an accommodative mode. At the central bank’s monetary policy review on August 4, Rajan had kept the repo rate unchanged, after cutting it thrice this year. In what will strengthen the case for monetary policy easing, wholesale price deflation has persisted for eight months (till June).

In the quarter ended June this year, gross fixed capital formation, a proxy for investment, increased 4.8 per cent, against growth of 4.1 per cent in the previous quarter and 8.7 per cent in the first quarter of FY15. As such, investment is only slowly picking pace, though it isn’t at the levels seen a year ago Jackpot Stocks Trading Tips

Demand, as reflected by private final consumption expenditure, slowed to 7.3 per cent in the June quarter from 7.9 per cent in the fourth quarter of FY15 and 6.2 per cent in the first quarter of the year. Foreign demand also remained lacklustre, with merchandise exports declining for the seventh consecutive month in June.

The government is looking at reviving investment through capital expenditure from its side, as private investment remains dismal due to low demand and indebtedness of the private sector. Latest data show the government’s capital expenditure rose 18 per cent in the quarter ended June this year.

Government expenditure accounts for a very small part of overall capital formation. Of the total capital expenditure of Rs 9 lakh crore, government expenditure is about Rs 58,609 crore; the rest is accounted for by the private sector, public sector undertakings, states and households. The government’s final consumption expenditure increased 1.1 per cent in the June quarter, against a decline of 7.9 per cent in the previous quarter and growth of 1.5 per cent in the first quarter of FY16. To boost domestic demand, the government is looking at increasing spending. Last month, Finance Minister Arun Jaitley had sought parliamentary approval for an additional increase of Rs 25,000 crore in government spending this financial year Commodity Market Astrology Tips