New Delhi: The Central Statistics Office (CSO) on Thursday revised downward its GDP growth forecast for 2018-19 to 7% from 7.2% projected earlier. It estimated the India’s economy to have grown at 6.6% in the December quarter (Q3), lower than Reuters estimate of 6.9% for the same quarter and slowest in five quarters. The GDP data for Q1 (April-June) and Q2 (July-September) were also revised to 8% and 7%, respectively.
While agriculture is estimated to grow at 2.7%, manufacturing is expected to accelerate to 8.1% in 2018-19. However, trade, hotel and transportation sector is expected to decelerate to 6.8% during the year.
On 7 February, Reserve Bank of India’s (RBI) monetary policy committee (MPC) cut the repo rate by 25 basis points and changed its policy stance to “neutral” from “calibrated tightening”, taking into consideration the benign headline retail inflation and threat of a global slowdown.
One basis point is one-hundredth of a percentage point.
RBI governor Shaktikanta Das had at that time said that the shift in monetary policy stance provides flexibility and room to address challenges to sustained growth of the Indian economy over the coming months, as long as the inflation outlook remains benign. “The decisions of the MPC in this regard will be data-driven and in consonance with the primary objective of monetary policy to maintain price stability while keeping in mind the objective of growth,” Das had said.
India’s retail inflation slowed to a 19-month low in January while factory output, dragged down by a negative base effect, remained subdued in December—giving the central bank enough wiggle room to effect another rate cut.
CSO data released earlier this month showed consumer price index (CPI), a measure of retail inflation, stood at 2.05% in January. India’s factory output, measured by index of industrial prodcution (IIP) recovered to 2.4% in December from 0.3% in November.
To be sure, India still grew faster than China in Q3—thus retaining its tag as the world’s fastest growing makor economy. China grew by 6.4% in the December quarter.