Q2 GDP data disappointing, but see bright spots: Govt

NEW DELHI: Govt on Friday said that it was disappointed with 5.4% GDP growth in the Sept quarter but remained hopeful of the economy expanding at 6.5% during the current fiscal year, arguing that the projection was “not in danger”. “Real GDP growth print of 5.4% is on the lower side and it is disappointing, but there are some bright spots,” chief economic adviser V Anantha Nageswaran told reporters.
Identifying agriculture and construction as bright spots, he said that record production estimates for kharif foodgrains as well as promising rabi crop prospects augur well for farm income and rural demand. Besides, CEA said, labour market was showing strong signs of growth, with unemployment rate easing and the formal workforce expanding, thanks to increase in manufacturing jobs and a strong inflow of youth into organised sectors.

Better growth in labour incomes holds the key to sustained demand growth and capital formation in the private sector, he said, adding, global crude oil prices remaining low, bodes well for economic activity and price stability.
The Economic Survey projected 6.5-7% growth this year, and the economy was widely expected to slow down during the Sept quarter on the back of sluggish consumption and investment. The 5.4% reading released by the National Statistics Office was lower than most economists expected.
Nageswaran said the estimate was “disappointing, but not alarming”, adding that the economy remained resilient, “underpinned by steady demand and strong manufacturing and service sector activity”. He also cited global crude oil prices, which remained soft, as a positive for the economy. On the challenges, Nageswaran said geopolitical conditions remain fragile and may continue to impact domestic inflation, supply chains and capital flows.