According to Karvy Stock Broking, India's Gross Domestic Product growth for Q2 FY13 to drop to nearly 3 and a half year low of 5.1% which is mainly expected to be driven by sluggish growth in electricity generation and sharp drop in trade sector's growth as compared to last year.
It said that agriculture growth is expected to grow at 2.9% from 3.1% in Q2FY12. The figure in real terms still looks on higher side as food inflation in the Q2FY13 eased down as compared to last year.
It expects industry sector growth to moderate to 3.3% as compared to 3.6% in last quarter on back of sharp drop in electricity generation from 6.3% in Q1FY13 to expected growth of 2.8% in Q2FY13. This lower growth is primarily due to power shortages in northern part of the country and lower generation of hydroelectricity led by drop in reservoir levels. On the other hand within the industry sector, construction activity is the only sector which is expected to remain robust.
Trade sector's performance within the services sector is expected to remain subdued based on meager growth of 2.9% in exports and double digits growth in imports in Q2FY13.
In this quarter, banking performance weakened to the three year low; based on this it believes that financial services sector to grow at 8.7%.
It added that ''Our GDP estimate for FY13 is 5.3% which is on back of further weakness in services sector. Services sector is estimated to grow by 6.4% as compared to 8.9% growth in FY12. Due to sluggish demand for exports, trade sector is expected to weigh heavily on performance in Services sector.''
