Economic growth slumps to decade low of 5 percent

New Delhi, May 31 (IANS) India’s economic growth slumped to a decade-low of 5 percent in the financial year ended March 31, 2013, due to poor show of mining and farm sectors, official data showed Friday.

According to data released by the Central Statistics Office (CSO), the country’s gross domestic product (GDP) registered a feeble recovery in January-March quarter posting a growth of 4.8 percent. It had expanded by 4.7 percent in the previous quarter.

The economic growth remained below five percent in the second half of the year, even as the government took a number of steps to revive investments and growth.

Reacting to the data, Planning Commission Deputy Chairman Montek Singh Ahluwalia said it did not give any indication of strong recovery.

“There is evidence the economy has bottomed out. But we don’t have evidence yet of a strong recovery,” Ahluwalia said.

The Indian economy had expanded by 6.2 percent in financial year 2011-12. The growth declined to 5.4 percent in the first quarter of 2012-13 and fell further to 5.2 percent in the second quarter.

The farm sector grew at a sluggish 1.9 percent in 2012-13, while the mining sector contracted by 0.6 percent.

“Effective mining bans in some states and environmental clearance issues have been plaguing the sector for quite some time and focused intervention is necessary,” said Anis Chakravarty, senior director, Deloitte in India.

The growth rates in various sectors during the fourth quarter of 2012-13 were — agriculture, forestry and fishing 1.4 percent; mining and quarrying minus 3.1 percent; manufacturing 2.6 percent; electricity, gas and water supply 2.8 percent; construction 4.4 percent; trade, hotels, transport and communication 6.2 percent; financing, insurance, real estate and business services 9.1 percent; and community, social and personal services 4.0 percent.

“Government spending had contracted during the quarter and farm output was also expected to remain damp. It is good to see manufacturing output being marginally higher than the previous quarter,” Chakravarty said.

The disappointing data dashed hopes for early rate cuts next month plunging the equities markets. The benchmark Sensex of the BSE tumbled 455 points or 2.25 percent, while the wide-based Nifty of the NSE also fell more than 2 percent.

“We do believe that growth is bottoming out but the recovery is likely to be gradual with a lagged pick-up in consumption and investment and we expect real GDP growth at about 5.8 percent going into 2013-14,” said Bhupali Gursale, economist at Angel Broking.

“For the economy, the positives going ahead are likely to come from a sustained deceleration in headline inflation rates and improvement in indicators such as the current account deficit and fiscal deficit,” Gursale said.

The country’s gross domestic product (GDP) at constant (2004-05) prices in the year 2012-13 is estimated at Rs.55,05,437 crore, showing a growth rate of five percent over the first revised estimates of GDP for the year 2011-12 of Rs.52,43,582 crore, CSO data showed.

The gross national income at 2004-05 prices increased by 4.9 percent to Rs.54,49,104 crore in the financial year ended March 31, 2013.

“The Q4 GDP growth figures at 4.8 percent is disappointing, but on expected lines,” said Chandrajit Banerjee, director general, Confederation of Indian Industry (CII).

“With no visible pick up in any key levers of the economy, the situation remains grim. Demand in the system is weak with low levels of consumption, government expenditure and investments,” he said.

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