New Delhi, May 31 (IANS) 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.
