India: Growth moderates in the third quarter
February 28, 2011
In the October-December period ? the third quarter of the fiscal year 2010/11 ? GDP expanded 8.2% over the same period the year before. The reading came in below the previous quarter's 8.9% expansion and undershot market expectations, which had the economy growing 8.6%. The quarterly deceleration was mostly the result of weaker growth in the hotels, trade, transport, and communications sector, which accounts for more than a quarter of total output, slowing to a 9.4% expansion (Q2 2010/11: +12.1% year-on-year). In the same vein, growth in the manufacturing sector slowed for the fourth consecutive quarter, stepping down to 5.6% (Q2 2010/11: +9.8% yoy). In contrast, the agricultural sector picked up amid a good autumn harvest, while the financial services, real estate and business services sector continued to gather momentum. Against this backdrop, both the government and the Reserve Bank of India's expect the economy to grow 8.6% in the current fiscal year. For the fiscal year 2011/12, the government projected in its most recent budget the economy to expand between 8.75% and 9.25%.