The economic growth slowed to a seven-year low of 5 % in April to June quarter from 8 % a year ago, government data showed on Friday.
The slowdown was largely due to a sharp dip in the manufacturing sector and agriculture output said the Ministry of Statistics and Programme Implementation in a statement.
The previous low was recorded at 4.9 % in April to June 2012-13. Consumer demand and private investment have weakened amid global trade frictions and dampening business sentiment.
The manufacturing sector grew by 0.6 % as compared to a growth of 12.1 % in Q1 2018-19. Agriculture, forestry and fishing’ sector grew by 2 % as compared to growth of 5.1 % in Q1 2018-19.
On the other hand, mining and quarrying sector grew by 2.7 per cent as compared to a growth of 0.4 % in the corresponding quarter of previous fiscal. Electricity, gas, water supply and other utility services sector grew by 8.6 % as compared to growth of 6.7 % in Q1 2018-19.
Although the Reserve Bank of India has cut the key lending rate four times in succession by a total of 110 basis points, several economists are apprehensive of this translating into growth soon. One basis point is one-hundredth of a percentage point.
The ongoing economic slowdown has started hurting corporates as well, with companies reporting a sharp decline in both revenue and profit growth numbers in the June quarter.
The passenger vehicle industry suffered its worst performance in 19 years last month with a 31 % drop in sales and the ninth consecutive month of declining sales, underscoring a sharp decline in demand.