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Economic growth falls to 3-year low at 6.1 percent
Wednesday February 29, 2012 09:51:23 PM,
IANS
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New Delhi: India's economic growth slumped to a near three-year low of 6.1
percent in the quarter ended December due to poor performance of
manufacturing and mining sectors, official data showed Wednesday.
The data makes it increasingly clear that growth is likely to fall
well below seven percent against the budgetary target of 9 percent
and the 7.1 percent growth projected by the Prime Minister's
economic advisory panel recently.
This was the slowest pace of economic growth in the last 11
quarters. Higher interest rates, rising inflation, global economic
turmoil and a slew of policy issues curbing investment sentiment
have contributed to the economy's dismal performance.
This was also the seventh consecutive time that quarterly growth
had slipped. It had risen by 6.9 percent in the quarter ending
September and 7.7 percent in the three-month period before that.
The persistent slowdown in growth will make it difficult to
achieve the even lower revised 6.9 percent growth in the financial
year ending March 31.
"Real GDP growth rate for the third quarter of 2011-12 at 6.1
percent may drive GDP growth to below 6.9 percent for current
fiscal," said Rajiv Kumar, secretary general of the Federation of
Indian Chambers of Commerce and Industry (Ficci).
Kumar pointed out that if economic growth fell below 6.8 percent,
it would be lower than the growth registered in 2008-09, the year
of the post-Lehman crisis.
Manufacturing was hit hard, logging a meagre 0.4 percent growth in
the quarter under review, compared to 7.8 percent in the previous
corresponding period, according to data released by the ministry
of statistics and programme implementation.
Mining was another sector hit badly and contracted by 3.1 percent.
It had registered a growth of 6.1 percent in the October-December
quarter of 2010-11.
Agriculture also saw a sharp decline at 2.7 percent but that was
mostly because of a high base as the sector had grown 11 percent
in the year-ago period. Financial services grew at 9 percent in
the quarter, while social and personal services logged a 7.9
percent growth.
"The near stagnation in the manufacturing sector is worrying at a
time when policy makers are keen to raise the share of this sector
in the economy. Mining is also an area of serious concern, as the
sector has been contracting for two consecutive quarters," said
Chandrajit Banerjee, director general of the Confederation of
Indian Industry (CII).
Banerjee urged the government to push forward the economic reform
process to stimulate growth.
"All policy levers should be used to drive a revival in the
economy. Project clearances should be hastened, implementation of
the manufacturing policy should begin by identifying specific
zones where industry can invest and interest rates should be
reduced," he said.
The latest figures will come as a disappointment to policy-makers
in the run up to the budget. The scenario is not likely to change
much in the current quarter as well since, according to the
advanced estimates given by the government, the GDP is expected to
increase by only 6.9 percent for the whole year.
"With fourth-quarter estimates also being weak, it is virtually
certain that the GDP numbers for the current fiscal will stand
below 7 percent," said Anis Chakravarty, director & senior
economist, Deloitte Haskins & Sells.
"It is important that policy-makers now re-focus on the structural
constraints plaguing the economy and dragging growth down. Unless
strong measures are taken to have an implementable plan for
revival of the manufacturing sector, it is unlikely that GDP
numbers in the coming quarters will improve noticeably," he added.
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