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.

Latest News from India News Desk