India's economic growth slowed to 5.3 per cent in the three months through September from 5.7 per cent in the previous quarter, dragged down by weaker manufacturing, government data showed on Friday.
Analysts polled by Reuters had forecast annual growth of 5.1 per cent in the quarter.
Commentary
Rupa Rege nitsure, chief economist, Bank of Baroda, Mumbai
If I go by all leading indicators, they suggest credit demand has almost collapsed and corporates are still in wait and watch mode. So maybe the impact of delayed monsoon will be more severely felt in the third quarter GDP numbers.
So in my understanding of the underlying currents, growth appears to be in the neighbourhood of 5.2-5.3 per cent (2014/15).
RBI will not give much weightage to this factor because they want to institute a credible inflation fighting regime.
They have been saying in clear terms that the growth stimulus has to come from the government.
They would like to wait and see the trend in global commodity prices because geopolitical factors cannot be taken for granted.
They will not take any action hastily now or in the current fiscal year.
Increasingly, their tone will become more dovish.
It is likely RBI may go for sector-specific measures to stimulate credit rather than the broad-brush approach of bringing down interest rates.
Shivom Chakrabarti, senior economist, HDFC Bank, Mumbai
The GDP growth number is slightly better than we expected because of better-than-expected agriculture growth which we do not expect to sustain in the third and fourth quarters.
Overall, the economy has bottomed out and there is a slow and modest recovery.
Now the onus is on the government to boost growth by reviving investment climate and get reforms moving like passing the land acquisition bill, goods and service tax, insurance bill.
That will have a more pronounced impact on growth in the next fiscal year.
A rate cut will help, but given RBI's aggressive stance to achieve 6 per cent inflation by Jan 2016, we expect RBI to cut rates at the earliest in February but the tone of the policy statement on Tuesday will be dovish to build in a case for a rate cut going ahead.
