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New Delhi: India's
economic growth slumped to 5.3 percent in the January-March
quarter, the slowest in nine years, dragged by contraction in the
manufacturing sector due to high cost of borrowings, official data
showed Thursday.
For the whole of 2011-12 financial year, the gross domestic
product (GDP) growth slumped to 6.5 percent. This is the slowest
pace of expansion in the country's economy since 2002-03, when it
had registered a growth of just 4 percent.
"This is the lowest in the contemporary period. It has been
substantially down because of the very poor performance of
manufacturing sector," Finance Minister Pranab Mukherjee told
reporters while reacting on the data.
During January-March 2012 quarter, manufacturing sector contracted
by 0.3 percent as against a growth of 7.3 percent registered
during the corresponding period of previous year.
"Because of the manufacturing sector, the overall growth of the
GDP has come down substantially," the finance minister said.
Mukherjee said the GDP was set to recover as most of the factors
leading to the sharp drop in economic growth in 2011-12 had
"bottomed out".
The GDP growth data is down from the government's estimate of 6.9
percent announced earlier this year, and sharply down from the
previous year's growth of 8.4 percent. In the budget for 2011-12,
the government had set a target of around 9 percent growth.
The GDP at factor cost at constant (2004-05) prices in the year
2011-12 is now estimated at Rs.52,02,514 crore as against
Rs.52,22,027 crore estimated earlier on Feb 7, 2012, showing a
growth rate of 6.5 per cent, the Central Statistics Office (CSO)
said.
In the quick estimate of GDP released in February, the CSO had
projected 6.9 percent growth for 2011-12.
"The downward revision in the GDP growth rate is mainly on account
of lower performance in 'manufacturing' and 'trade, hotels,
transport and communication' than anticipated," the CSO said.
Economic policy makers as well as industry bodies have termed the
data disappointing and shocking.
"This is obviously disappointing. Decline in industrial production
has not been offset by growth in agricultural production," said C.
Rangarajan, chairman of the Prime Minister's Economic Advisory
Council.
Rangarajan said farm sector was likely to do better this year on
the back of good monsoon.
"Basically the slowdown is there, we will have to do something
about it," said Montek Singh Ahluwalia, deputy chairman of the
Planning Commission.
Anis Chakravarty, senior director, Deloitte in India, said the
fourth quarter data indicated weakening growth prospects and a
structural slowdown of the economy.
"GDP target of 7.6 percent in 2012-13 seems difficult unless
policy reforms are put in place to address some of the core
issues," Chakravarty.
"The economy is in the throes of a serious slowdown," said
Chandrajit Banerjee, director general of the Confederation of
Indian Industry called for immediate and bold actions from the
government and the RBI in a coordinated manner, saying the economy
is in the throes of a serious slowdown.
"The manufacturing sector growth has slumped to (-) 0.3 percent in
fourth quarter and 2.5 percent for the year as a whole. This will
severely pull down services sector growth in the coming quarters,"
said Rajiv Kumar, secretary general, Federation of Indian Chambers
of Commerce and Industry (FICCI).
"The current global situation remains fragile and all steps need
to be taken on the domestic front to guard against such
uncertainties," Kumar said.
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