India’s GDP growth for the second quarter (July-September) of the current financial year 2012-13 dropped marginally to 5.3% compared to 5.5% in the previous quarter due to poor performance by the manufacturing and agricultural sectors. India’s GDP growth stood at 6.7% in the same period last financial year. The drop in GDP growth number confirms slowdown in the economic activity and calls for interest rate cut by the RBI.
The drop in GDP growth was mainly due to manufacturing and agricultural sectors which grew by just 0.8% and 1.2% respectively in the second quarter compared to 2.9% and 3.1% growth in the same quarter last year. Agricultural growth was mainly affected due to poor monsoon rains. At the same time, mining sector growth jumped significantly to 1.9% in the second quarter compared to 5.4% contraction in the same quarter last year. Growth in construction and Service sectors stood at 6.7% and 7.2% respectively compared to 6.3% and 8.8% growth in the same quarter last year.
Fixed investment jumped by 4% and government consumption growth stood at 8.7% in the same quarter which is a good sign for the economy. With this drop in GDP growth, RBI needs to act now by cutting benchmark interest rates in order to boost both economic as well as industrial growth.