Domestic rating agency Icra in its latest report has said that GDP growth for second quarter of current financial (Q2FY19) is expected to dip to 7.2% on account sluggishness in agriculture and industry. The fall in the growth number will be mainly due to a pull down from industry where growth is expected to slow down to 7.1% in the in second quarter as compared to 10.3% in first quarter and the farm sector, which may slow down to 3.5% from 5.3%. The GDP had grown by a higher than expected 8.2% in the first quarter of the current financial year as compared to the year-ago period.
The report further highlighted that higher fuel prices and the weak rupee were pointed out as the primary factors dragging the industrial growth, while an uneven and sub-par monsoon, flooding in some areas amid a late withdrawal of the monsoon rains, and instances of crop damage and pest attacks will impact the farm sector.
Besides, Icra’s principal economist Aditi Nayar stated that pre-tax margins for companies have declined on a quarter-on-quarter basis because of a rise in the input and energy costs and the rupee depreciation. Moreover she added “Overall, we expect manufacturing GVA (gross value added) growth to ease to 7.0% in Q2FY19 from the healthy 13.5% expansion in Q1FY19”.
