GDP slows to 6.5% in 2012, 5.3% in Q4
Hit hard by global woes and domestic problems, India's economic growth rate slowed to a nine-year low, both in the March quarter at 5.3 per cent as well as in 2011-12 at 6.5 per cent, prompting the industry to demand ‘immediate and bold action’ to arrest slowdown.
The decline in growth was witnessed in almost all segments of the economy including agriculture, manufacturing, mining and construction.
Finance minister Pranab Mukherjee said: ‘GDP growth is the lowest in contemporary period. It has been substantially because of the very poor performance of manufacturing sector’.
The Central Statistical Organisation (CSO) has revised the growth rate for 2011-12 to 6.5 per cent from 6.9 per cent estimated earlier. This is the lowest growth rate since 2002-03 when the economy grew by 4 per cent.
The manufacturing output slowed to 2.5 per cent, from 7.6 per cent in previous fiscal.
‘Economic growth is very disappointing. The performance of the current fiscal will depend up how well the industry picks up. We believe the growth rate in the current fiscal can be between 6.5 to 7 per cent’, chairman of Prime Minister's Economic Advisory Council C Rangarajan said.
Disappointing GDP numbers pulled down BSE Sensex by over 93 points to close at 16,218.53 points.
The growth rate of eight infrastructure sectors slowed down to 2.2 per cent in April because of poor performance of crude oil, natural gas, petroleum refinery products and fertilisers.
The eight core sectors that also include coal, electricity, cement and finished steel, and have a weightage of 37.9 per cent in the Index of Industrial Production, had grown by 4.2 per cent in April 2011.
The cumulative growth rate of infrastructure industries during 2011-12 also slowed down to 4.4 per cent, from 6.6 per cent in 2010-11, according to the data released by the commerce and industry ministry.
Natural gas and crude oil production contracted by 11.3 per cent and 1.3 per cent respectively during April. Petroleum refinery products and fertiliser production shrunk 2.8 per cent and 9.3 per cent respectively during the month.
Coal, steel and cement output grew by 3.8 per cent, 5.8 per cent and 8.6 per cent in April 2012. In the same month last year, coal output had grown 2.7 per cent, steel - 2.9 per cent and cement - 0.1 per cent.
GOVERNMENT WILL TAKE STEPS TO IMPROVE GROWTH: FM
Terming decline in economic growth rate to nine-year low of 6.5 per cent in 2011-12 as ‘disappointing’, finance minister Pranab Mukherjee on Thursday said the government will take ‘necessary steps’ to improve growth.
‘The government would take all necessary steps to address imbalance on the fiscal front and on the current account. It would help in checking inflationary expectations and inspire confidence for improved capital inflows as well as recovery in domestic investment growth,’ the minister said.
Mukherjee was commenting on the GDP data which showed that the growth rate during 2011-12 declined to 6.5 per cent from 8.4 per cent in the preceding two fiscals.
Attributing the slowdown to tight monetary policy, rising interest rates, weak global sentiments and environmental issues in the mining sector, Mukherjee expressed the hope that the situation would improve as ‘most of the factors have bottomed out’.
He further said, ‘The (interest) rate cycle has been reversed, mining sector growth has turned around, progress has been made on fuel linkage of coal-based power projects; a turnaround in the investment growth rate in the fourth quarter, which had been negative.’
Meanwhile, Planning Commission deputy chairman Montek Singh Ahluwalia said, ‘It is obvious that the last quarter (growth) was disappointingly low. So, the slowdown is more than what we thought... We have to do something about it.