- India's economic growth slows for fifth quarter in a row
- Weak consumer demand, private investments behind slowdown, say analysts
- Agriculture growth declines to 2% from 5.1% a year ago
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Economists in a poll by news agency Reuters had forecast an annual growth of 5.7 per cent in the June quarter.
Analysts say that weak consumer demand and private investments are reasons behind the slowdown in the economy.
"The government needs to address structural and cyclical issues to address the economic slowdown," said Devindra Pant, chief economist of India Ratings, an arm of Fitch Ratings, citing a slowdown in the sales of autos and construction and a dip in consumer demand.
Manufacturing sector witnessed a sharp slowdown as manufacturing sector's gross value added or GVA in the first quarter crashed to 0.6 per cent from 12.1 per cent in the corresponding quarter last year.
Earlier this month, the Reserve Bank of India while cutting the repo rate by 35 basis points lowered its real GDP projection for the current financial year to 6.9 per cent, from 7 per cent.
The RBI expects GDP growth at 5.8-6.6 per cent in the first half of 2019-20, and 7.3-7.5 per cent in the second. It sees consumer inflation remaining inside its target range over a 12-month horizon.
Growth in the agriculture sector declined to 2 per cent from 5.1 per cent in the year-ago period.
Earlier in the day, the government announced four mega merger plans of state-run banks. The government "wants a strong financial system" and the banking reforms will clear the path to make the country a $5-trillion economy, Finance Minister Nirmala Sitharaman said in a press conference.
In a bid to tackle the slowing economic growth, the government has within a span of one week announced a slew of steps - from waving off higher taxes on the foreign investors to recapitalising state-run banks.
Many credit ratings agencies had lowered their growth projections over the past few weeks. India Ratings cut its projection to a six-year low at 6.7 per cent in the current fiscal year from 7.3 per cent.
(With inputs from agencies)