Millennium Post

India slows down

The Indian economy suffered an expected setback on Thursday when the GDP numbers for 2011-12 were announced. The last quarter growth for the last financial year stood at a dismal 5.3 per cent. This number was a logical progression from the dwindling growth data coming in the last few months in different sectors. The January-March data is the slowest growth in the last nine years.  

The last quarter result brought down the growth figure for the last financial year to 6.5 per cent. This is the slowest pace of expansion in the country's economy since 2002-03, when it had registered a growth of just 4 per cent. 'This is the lowest in the contemporary period. It has been substantially down because of the very poor performance of manufacturing sector,' the finance minister Pranab Mukherjee told reporters while reacting to the data.

He said that the Indian government would 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 in a statement.

During January-March 2012 quarter, the manufacturing sector contracted by 0.3 per cent, as against a growth of 7.3 percent registered during the corresponding period of previous year.

The GDP growth data is down from the government's estimate of 6.9 per cent announced earlier this year, and sharply down from the previous year's growth of 8.4 per cent. 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 7 February 2012, showing a growth rate of 6.5 per cent, the Central Statistics Office (CSO) said.

'This is obviously disappointing. Decline in industrial production has not been offset by growth in agricultural production,' said C Rangarajan, the chairman of the Prime Minister's Economic Advisory Council. The data has prompted him to lower the outlook for the current fiscal to 6.5-7 per cent against the government projections of 7.5 per cent.

'This is the fourth straight quarter of decline and quarterly growth dipped to the same level during Q3 of 2008-09 (5.6%). Nevertheless, this decline in growth is not surprising, as FICCI had forewarned in April that the Q3 growth did not represent the bottoming out of the economy,' said Rajiv Kumar, secretary general, the Federation of Indian Chambers of Commerce and Industry (FICCI).

The CII director general Chandrajit Banerjee said that the government and the Reserve Bank of India should take 'immediate and bold actions' to step up growth.

Disappointing GDP numbers pulled down BSE Sensex by over 140 points to 16,169, while rupee touched a new low at 56.50 to a dollar amid concerns over sovereign debt issues in euro-zone countries.

The Planning Commission Deputy chairperson 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.'
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