The moderation of India's GDP growth may have begun in the second quarter

The Indian economy, which experienced strong growth in the first quarter of the current year, may have begun to slow down even before the real estate sector was fully affected by the liquidity pressures.

The growth of gross domestic product in the July to September period is estimated at 7.5%, according to a survey of economists conducted by Bloomberg. This is lower than the 8.2% growth recorded in the first quarter of the year. The growth in gross value added is set at 7.3%, compared with 8% in the first quarter. The growth of GVA has become a preferred measure of economic activity as it eliminates the impact of indirect taxes and subsidies.

"One of the current concerns is the potential for slowing economic growth, the bulk of which will likely be apparent in the third quarter. For the 19th year, but expected to start in September 2018, it will largely fund the consumption of alcohol, "said Saugata Bhattacharya, chief economist at Axis Bank, in a report released earlier this week. Axis Bank expects GDP growth of 7.6% in the second quarter and 7.4% of GVA.

Among the key sectors, agriculture is expected to post strong output growth, but low agricultural prices could mean that rural demand will remain moderate. This too could slow down growth. "GVA growth in the second quarter could be between 7.3% and 7.4%, due to slowing rural demand," said Soumya Kanti Ghosh, chief economist at the State Bank of India.

Other demand indicators, such as commercial vehicle sales, domestic pbadenger traffic, and cement production, maintained double-digit growth, which could indicate that growth is between 7.3 and 7, 5%. Ghosh adds that the weak base will be favored in the second quarter of fiscal 2010.

Industrial activity slows, with the ICRA estimating its growth to 7.1% in the second quarter, up from 10, 3% in the first quarter. GVA growth for the manufacturing sector, in particular, is expected to drop to 7% for the quarter ended September, compared to 13.5% for the June quarter. On the other hand, activity in the construction sector is expected to remain strong, as judged by trends in cement and steel production.

In the services sector, higher government spending and financial services are expected to offset the decline in construction and trade, said Bhattacharya of Axis Bank. .

Most economists expect growth to be slow in the second half, with annual growth of between 7 and 7.5 percent. The Reserve Bank of India has set the growth at 7.4% for the current year.

As growth is moderate and inflation remains below expectations, economists expect the Monetary Policy Committee to maintain rates at its meeting next week.

According to you, the RBI will probably pause for the remainder of fiscal year 19, but will remain vigilant against the upside risks of inflation, "said Kotak Institutional Equities in a report this week.