Millennium Post

Turnaround? GDP growth rises to 4.8%

After crashing to a four-year low of 4.4 per cent in the first quarter (April-June 2013) of the current fiscal (2013-14), the country’s gross domestic product (GDP) growth rate improved to 4.8 per cent in the second quarter (July-September 2013).  

The improvement in the Indian economy’s expansion, which came as a pleasant surprise both to policy analysts and corporate captains, was spearheaded by improved agricultural production and better infrastructure performance. However, the figure of 4.8 per cent still marked the fourth successive quarter of below-5-per cent economic growth, way below the 8 per cent that the Manmohan Singh Government claims it has been targeting.

Stubbornly high inflation led by runaway vegetable prices is a big worry for the Government and led the Reserve Bank of India (RBI), the country’s central bank, to hike repo rates in its last two policy reviews, which has been painful for businesses looking for low-interest credit to expand output.

The persistently high inflation continues to suppress urban consumer demand, which drives the economy, and industry remains wary about expanding capacity in the presence of high borrowing costs and stagflation-like conditions. Investment slowed to a decade-low 1.7 per cent in financial year 2012-13.
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