India's GDP growth slows to 6.6 percent in 2018 Q4

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India's economy lost momentum in the final quarter of 2018, reducing the annual rate of growth to 6.6 percent, the slowest pace in five quarters and much less than expected.

The slowdown may be bad news for Prime Minister Narendra Modi as he seeks a second term in office at a general election due by May. He is already under pressure from declining farm incomes and weak jobs growth.

It could also prompt the nation's central bank to reduce interest rates at its April meeting, after cutting 25 basis points off its benchmark rate in February.

Weaker consumer demand and lower government spending were blamed for the slowdown.

Economists said the economy could slow further in the current quarter, the last of the fiscal year, citing weakening global growth and conflict with Pakistan.

Concerns about the economy are putting Prime Minister Narendra Modi under pressure ahead of elections later this year. /VCG Photo

The two countries launched tit-for-tat air strikes after a February 14 suicide car bombing that killed 41 Indian paramilitary personnel in India-controlled Kashmir.

Aurodeep Nandi, India economist at Nomura in Mumbai, said the GDP growth numbers showed a cyclical slowdown was getting entrenched.

"Going ahead, we do expect further moderation on tighter financial conditions, weaker global demand and political uncertainty," Nandi said.

"The dullness of growth prospects serves as a recipe for a 25-basis-point rate cut in April."

The Statistics Ministry revised its estimate for economic growth in the fiscal year ending March 31 to a five-year low of 7.0 percent from an earlier estimate of 7.2 percent.

That implies the January-March quarter growth will fall as low as 6.1 percent, economists said.

The growth rate in the last quarter was still faster than China's 6.4 percent, but India's economy has decelerated from a revised 8.0 percent last April-June.

Consumer spending, which accounts for nearly 60 percent of the economy, slowed to an 8.4-percent rise in the October-December quarter, compared with a revised 9.9-percent increase in the previous quarter.

Gross fixed capital formation - which includes spending on roads, ports, airports and power plants - rose 10.6 percent compared with a revised 10.2-percent annual increase in the previous quarter.

Manufacturing grew 6.7 percent annually, the data showed. Services, including construction, grew 7.6 percent from a year earlier.

Source(s): Reuters