At sluggish 5.5 per cent, GDP shows little promise

The Indian economy grew at a sluggish 5.5 per cent in the first quarter of this fiscal in comparison to 8 per cent in the corresponding quarter of the previous financial year owing to poor performance of manufacturing, mining and agriculture sector, the official data showed on Friday.

The April-June quarter data is slightly better than the 5.3 per cent growth registered in the country's gross domestic product (GDP) during the quarter ended 31 March 2012. The figure is better than analysts' expectations of 5.2 per cent. 

The sluggish growth in the first quarter was mainly on account of a mere 0.2 per cent growth in the manufacturing sector, against 7.3 per cent in the corresponding quarter of previous fiscal, even as farm sector growth dropped from 3.7 per cent to 2.9 per cent, according to data released by the Central Statistical Organisation.

Construction and services sector, which includes insurance, finance and realty, grew at 10.9 per cent and 10.8 per cent, respectively, during the quarter under review. These two groups had expanded by 3.5 per cent and 9.4 per cent, respectively, in the first quarter of 2011-12.

Seeing the data, top economic policy makers said the growth numbers were consistent with the government's estimates. 'These numbers are consistent with the overall economic growth of 6.7 per cent projected by us,' said C Rangarajan, chairperson of the prime minister's Economic Advisory Council. Rangarajan said the economic growth is likely to remain sluggish even in the second quarter of the current financial year. 'You will see pick-up in the second half of the year. In the third and fourth quarter, one should expect the rebound,' he said. 

The Indian economy has been under stress in the recent quarters largely due to poor performance of the industrial and farm sector. The country's GDP growth slumped to 6.5 per cent in 2011-12, which is even lower than the 6.7 per cent level achieved during the global financial crisis of 2008-09. The economy had expanded by 8.4 per cent in 2010-11.