NEW DELHI: India's economic growth eased to 5.3 percent in the July-September quarter, extending a slowdown since the start of the year, data showed yesterday, but analysts said a "modest recovery" was looming.
While the growth rate for the quarter to September was in line with most market expectations, it was weaker than the 5.5 percent growth in the April-to-June quarter and well down from 6.7 percent expansion a year ago.
But analysts saw a silver lining in falling global oil prices, growing domestic demand as incomes rise and a recent burst of reforms by the government opening up sectors such as retail and aviation to more foreign investment.
"The conditions for a modest economic recovery are now in place," said Credit Suisse Robert Prior-Wandesforde, citing expectations of easing interest rates and the government's recent reform blitz to liberalize the economy.
The once-booming Indian economy has slowed sharply this year due to high interest rates, Europe's debt crisis and sluggish investment caused by domestic and overseas concerns about policy-making and corruption.
Manufacturing performed badly during the last quarter, growing by a scant 0.8 percent from a year earlier. Services such as hotels and transport grew 5.5 percent while finance and property activities jumped by 9.4 percent.
C. Rangarajan, head of Prime Minister Manmohan Singh's economic advisory council, expressed confidence that growth "in the second half (of the fiscal year) should be better".
"The overall growth rate for the economy could be between 5.5 and 6.0 percent for the full year," to March 2013, he told CNBC TV-18 news.
Goldman Sachs economist Tushar Poddar also saw "an improving outlook" and this week upgraded Indian shares in expectation of a pick-up in growth and easing inflation that would give the central bank more room to cut rates. While HSBC economist Leif Eskesen agreed that a pick-up was in sight, he added "we are most likely talking about a 'bathtub shaped' recovery..." with growth flattening out before rising again.
India's benchmark 30-share Sensex stock index has risen 11.15 percent from September to November, led by optimism over reforms and overseas fund inflows.
Yesterday, it climbed almost 1.0 percent to 19,321.55 points — its highest since April 2011.
India's growth numbers come as economists say the slowdown in neighboring China may also be bottoming out.
India’s growth eases to 5.3% in July-September quarter
