Economy gasps as growth sputters to 9-yr low of 5.3% 6.5% GDP Rate In 2011-12 Way Below Govt’s Estimates

New Delhi: India's economic growth has come down to a nine-year low of 5.3% in the January-March quarter of this year, showing up in bolder relief than ever before the signs of the severe stress in the economy, and prompting calls for urgent action to reverse the trend. 

    Data released by the Central Statistics Office (CSO) on Thursday showed growth in 2011-12 stood at 6.5%, much lower than the 8.4% posted in the previous year. It was below the government's previous estimate of 

6.9% and way off the mark of estimates handed out periodically by top government policymakers. 

    The Indian economy, once the star among emerging market economies, has steadily slowed since the January-March quarter of 2010-11, and on Thursday after digesting the January-March growth figure of 5.3%, some economists cut their growth estimates for 2012-13. 

    The manufacturing sector growth fell 0.3% in the March quarter compared to an expansion of 7.3% in the corresponding period the previous year. Agriculture posted a growth of 1.7%, sharply lower than the 7.5% growth in the March quarter of 2010-11 For the full year, the manufacturing sector grew 2.5% in 2011-12 compared with 7.6% in 2010-11. 

SLUGGISH ELEPHANT March quarter GDP growth at 5.3%, against 9.2% in Q4 of 2010-11 

Manufacturing scrapes the bottom with 0.3% decline, agriculture grows just 1.7%, services slow down to 7.9% from 10.6% 

Overall 2011-12 growth at 6.5%, lower than estimates of 6.9% Economists are scaling down growth projection 

for 2012-13 

Industry in gloom. Says govt should pull out all stops to stem the slide 

Growth in core sectors slows to 2.2% in April 

    Growth in the eight core industries slowed in April, pointing to a rut. Coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity grew 2.2% in April, lower than the 4.2% posted in the same month last year. P 19 

Govt in denial? FM hints that the worst is over 

    The finance ministry seemed to be in denial on Thursday, with officials saying India was still growing faster than many Eurozone countries. Pranab Mukherjee too suggested the worst was over, saying the factors for sluggishness had "bottomed out". P 19 Experts urge govt to step up reforms

New Delhi:The slide in the economic growth has led to calls for quick action on the part of the government. The sluggishness in the services sector, which accounts for nearly 60% of GDP, emerged as a worry for policymakers already burdened by the slowing economy and stubborn inflation. Data showed the services sector growth slowed to 7.9% in the March quarter compared with a10.6% expansion in the sameyear-ago period. The domestic demand-driven economy has been hit hard by high inflation, interest rates, rising global commodity prices, lack of economic reforms and delay in implementation of projects. This, in turn, has hit business confidence, forcing domestic players to explore investment options overseas. 

    Policymakers have consistently blamed the global economic environment and the lack of cooperation from the opposition in approving key economic legislations as reasons for the slowdown. The March quarter data came on a day when the opposition had called for a shutdown to protest the sharp increase in petrol prices. Analysts say the disappointing growth numbers could spoil the mood further and heighten the anxiety. 

    Finance Minister Pranab Mukherjee termed the March quarter data as disappointing but said the figures should be seen in the light of overall global developments. He attributed the slowdown to tight monetary policy and the weak global sentiment affected growth in domestic private investment. 

    But economists pointed to two key risks which included uncertainty about the monsoons and the European debt crisis and said the need of the hour was to step up reforms and ease supply bottlenecks.

COME AGAIN? 

There are several reasons that growth is almost universally predicted to be sustained at a high rate of 8-9% per annum and more, over the next few decades... —PRANAB MUKHERJEE ON AUG 6, 2011