The Indian economy grew at a higher-than expected 4.8 per cent in the September quarter. Growth in Gross Domestic Product or GDP is typically expressed as the growth rate over the same quarter in the previous year.
While the year-on-year growth rate is widely used, an analysis of the change in GDP on a sequential basis (September compared to June and so on) reveals some interesting trends.
A study of the quarter-on-quarter (QoQ) GDP growth since September 2004 shows that every year, the quarterly growth rate peaks in the December quarter.
Between 2005 and 2008, when the annual GDP growth averaged 9 per cent, growth in the December quarter averaged 13 per cent. In 2012-13 when the GDP growth rate was 5 per cent, December quarter growth was 8.38 per cent.
“Most of the major Indian festivals are celebrated in the last quarter due to which industrial growth picks up. Also, it is the time when agricultural produce reaches the market which in turn induces further expenditure, due to which the GDP peaks in December,” explained Rishi Shah, Economist at HDFC Bank.
It is also seen that the lowest quarterly growth in any year, invariably occurred in the June quarter. Soumya Kanti Ghosh, Chief Economic Advisor at State Bank of India, says “generally the third and the fourth quarter are better while the first quarter is on the lower side. This reflects the seasonal pattern in the QoQ growth.”
The June quarter has recorded a decline relative to March rate since 2004. The lowest growth was recorded in the quarter ended June 2013 when the GDP contracted 6.7 per cent sequentially.
Trade, hotel, transport and communication which were the highest contributors (26 per cent) to the overall GDP and the manufacturing sector which contributes 16 per cent to GDP have traced similar patterns. They recorded the fastest growth rate in the March quarter and the lowest growth in June quarter.
Patterns in components
Agriculture that contributes 16 per cent to the total GDP, recorded the fastest growth in the December quarter. This could be due to the increase in output after the harvest season following the June-September monsoons. Mining and quarrying with a 2 per cent weight in the GDP also records the highest growth rate in the December quarter and the lowest in the June quarter.
The other components of the GDP do not display any specific seasonal trend.