Nikhil Gupta, chief economist at Motilal Oswal Financial Services also pointed out that investment growth had weakened to a 22-quarter low.
- Singapore's DBS Bank said India's economic growth is expected to slow further in the second half of the year.
Economists expect the full-year GDP growth to slow down to around 5 per cent. In the previous quarter of the ongoing fiscal, the economic growth was 5 per cent.
In 2019, the RBI has reduced the repo rate for the fifth consecutive time, brining rate down to 5.15 per cent, the lowest since March 2010.
"The demand slump in the automotive sector, weakness in construction sector and lower growth in electricity sector partly brought about by excess rainfall in September have clearly impacted the economic momentum in Q2", Suman Chowdhury, President - Ratings at Acuité Ratings and Research said. Commerce Minister Piyush Goyal talks about Einstein's theory to say that no need to rely upon data of the economic indicators and the third Minister, the Finance Minister Nirmala Sitharaman says - Well, the economy is on a downward spiral, but, there is no economic recession", said Surjewala."Do they think that the people of India do not understand.
Economists expect India's central bank to announce yet another rate cut on Thursday to combat a liquidity crunch caused by the collapse of India's shadow banking sector.
The major factor in the GDP fall was manufacturing contracting by 1 per cent. The production of cement and the consumption of finished steel saw growth rates of 0.3% and 3.3% respectively during Q2 of 2019-20. Whereas the growth rate of the mining sector has come down from 2.2 percent in the second quarter of past year to 0.1 percent. This is as opposed to 12.5% and 9.9% respectively, in the same period past year. Similarly, trade, hotel, transport, communication and services related to broadcasting growth were also down to 4.8 per cent in the second quarter from 6.9 per cent a year ago. But the growth rate of public service, defense and other services has increased from 8.6 percent to 11.6 percent in the second quarter of previous year.
However, Garg said he is anxious about gross fixed capital formation which stood at 0.9 percent, as it indicates stalling of capital investment across many sectors. "The strong corrective action of the past 5 years, of emphasizing on rule of law and formalization of the economy, are bound to have a short-term drag effect", he said, while addressing the 30th convocation ceremony of Sambalpur University of Odisha, his alma mater on Friday. It has increased from 11.9 per cent in the second quarter of last year to 13.1 per cent this year.
"GDP figures released today are as low as 4.5 percent". The Indian economy grew by 5% in the first quarter of the year, its slowest annual pace since 2013. Having left much of the stimulus burden to the Reserve Bank of India early this year, Modi has recently taken bolder steps to reverse the decline, though the policy room for additional stimulus is narrowing.