India’s gross domestic product (GDP) was 7.1 per cent in this fiscal’s second quarter (Q2), 110 basis points (bps) lower than the first quarter’s (Q1) 8.2 per cent, but 80 bps higher than the previous year’s 6.3 per cent. Agriculture, manufacturing, construction and financial services reported lower Q2 growth over Q1, but fared better than the previous year.

Sectors like mining and quarrying registered a decline in the second quarter, both sequentially and annually, perhaps due to rising energy prices and input costs, according to data released in November end by the Ministry of statistics and programme implementation.

Sequentially, sectorial growth paints a faint picture and growth will likely reduce in the next two quarters, as lower government spending, muted consumption, oscillating rupee and the ongoing liquidity crisis threaten to dampen the 7.4 per cent growth hopes for this fiscal.

Experts foresee an acute slowdown in demand, rural and agrarian distress and a need for growth-boosting measures, but the government can do little, with the government’s full-year fiscal deficit target being breached in just six months, according to a report in a top South Indian English-language daily.

Much of the spending was borne by the government, which probably explains the fiscal deficit target breach. While economic affairs secretary SC Garg termed the moderate GDP growth ‘disappointing’, the Finance Ministry blamed adverse global conditions. “GDP growth at 7.1 per cent seems disappointing. Manufacturing growth at 7.4 per cent and agriculture at 3.8 per cent is steady. Construction at 6.8 per cent and mining at -2.4 per cent reflect monsoon months deceleration,” Garg tweeted.