Growth slows to 4-yr low of 4.4% in April-June quarter Manufacturing, Mining Sectors Turn Negative

New Delhi: The country's economy grew at its slowest pace in four years in the April-June quarter, dragged down by contraction in the manufacturing and mining sectors. The dismal data will pile more pressure on an embattled government to unveil fresh steps to reverse the slowdown. 

    Data released by the Central Statistics Office on Friday showed the economy grew 4.4% in April-June, slower than the 5.4% in the year-ago period and 4.8% in the January-March quarter. 
    The 4.4% expansion was the slowest since the 3.5% posted in January-March 2009, and the weakest pace of growth since the global financial crisis. 
    The Indian economy, Asia's third largest, has lost steam as policy delays, political uncertainty, high interest rates, global slowdown and stubborn inflation hurt expansion. WORST SINCE GLOBAL FINANCIAL CRISIS 
WHAT IT MEANS FOR YOU 
Slowdown in creation of jobs, lower salary hikes expected Business may be hit as growth stalls and interest rates rise; margins to come under pressureWeak demand may prompt companies to offer discounts REMEMBER WHAT THEY SAID? 
MANMOHAN SINGH | PM Jan 9, 2012 | The economy is expected to grow about 7% this financial year 
May 22, 2013 | The economic situation is turning around... 
Aug 15, 2013 | This phase of slow growth will not last long... P CHIDAMBARAM | FM Nov 5, 2012 | I'm looking forward to this year ending with 5.5- 6% growth.. next year getting back to 7%... 
Feb 8, 2013 | There are indications of green shoots... we can recapture the magic of 2004-08 (8.5% growth) 
WHEN CSO HAD THE LAST LAUGH 
Earlier in the year, the finance ministry had scoffed at CSO estimates, saying, "It is likely that the final estimate will be closer to the govt's estimate of a growth rate of 5.5% or slightly more. The CSO responded, "Perceptions can be different, they will get reconciled... in May when we have the complete IIP data for the year". 
According to data released on May 31, 2013, the economy grew at 5% in 2012-13, matching the CSO's earlier estimates Ease norms, reform fast: India IncGDP Growth May Hover Around 5% In FY14 In Absence Of Strong Measures 
New Delhi: The government has been under attack from opposition parties, industry and economists who have repeatedly called for urgent reform measures to boost growth and sentiment. The sharp slide of the rupee against the dollar and some controversial steps to stem its fall have added to the gloom in recent days. 
    But Prime Minister Manmohan Singh on Friday vowed to reverse the trend and expected growth to rebound on the back of a good monsoon, revival in global growth and stability of the rupee. "I believe this year, growth rate will be about 5.5%," Singh told lawmakers in the Rajya Sabha while replying to a debate on the state of the economy. 
    Friday's data showed that the vital manufacturing sector, which has been under stress for several months now, contracted 1.2% in the April-June quarter compared to a fall of 1% in the year-earlier period. The mining sector, which has been hit by policy and environmental delays, fell 2.8% compared to an expansion of 0.4% in the same quarter a year ago. 
    The services sector, which accounts for nearly 60% of the economy, slowed to 6.6% in the quarter compared with a 7.7% expansion in the year-earlier period. The farm sector remained robust, growing 2.7% in the June quarter compared with a 2.9% expansion in April-June 2012. 
    Economists said they expect growth to be around 5% in 2013-14. Several economists have already pared down their growth estimates against the backdrop of the sharp slowdown and volatility in the financial markets. 
    "Unlike the sharp recovery from the Lehman crisis (Vshaped) in 2009, this time the growth is following a L-shaped trajectory and is likely to oscillate around the 5% trough in 2013-14," said D K Joshi, chief economist at Crisil. 
    "Government spending was a significant driver of growth as private consumption growth weakened further to 1.6% and investments fell by1.2% compared to a year ago amidst lack of policy reforms, procedural delays and persistent supply-side bottlenecks," Joshi said. 
    Indian Inc called for immediate steps to stem the slowdown, slash regulatory hurdles to growth and stepping up reform measures. 
    "The economy continues to tread in difficult waters as many challenges remain on the fore. The precariousness displayed by the rupee has raised concerns afresh on the external front, industrial growth continues to face deceleration, and the investment cycle is yet to kick off," said Naina Lal Kidwai, president of FICCI. "Understandably there is no perfect recipe to steer out of the current state of affairs but what we need is swift action given the volatile situation," she added. 
    The pick-up in exports and the impact of a good monsoon are expected to help in a rebound in the months ahead but analysts say deep reforms are need to boost growth and revive sentiment which has taken a knock due to policy delays and approval of some industry-unfriendly measures such as the passage of land acquisition bill and food security bills. 
    Hopes of an easing in interest rates have also been dashed by the sharp volatility in the rupee and the steps taken by RBI to arrest the slide. Stubborn retail inflation, which is hovering near double-digit, has also acted as an obstacle to easing tight monetary policy. 
'BRICS to jointly tackle forex volatility' I ndia is liaising with other emerging-economy countries on a plan to co-ordinate intervention in offshore currency markets blamed for worsening a currency rout over the past three months, a senior Indian finance ministry official said on Friday. 
    The idea of major emerging economies taking action together to offset the impact of a stronger US dollar as the Federal Reserve reins in its stimulus had also been floated in June by Brazilian President Dilma Rousseff in a phone call to her Chinese counterpart. 
    "It is now time to stop," Dipak Dasgupta, the Indian finance ministry's principal economic adviser, said, referring to speculative behaviour in offshore markets he said was damaging the stability of the world economy. "It is going to happen in a matter of days rather than weeks," he said. "Brazil and India can start the move." REUTERS 
Bloc may reach deal on $100bn fund 
Beijing: BRICS countries may reach consensus at next month's G20 summit at St Petersburg on creating a $100 billion currency reserve fund to help ease short-term liquidity pressure and safeguard financial stability of major emerging economies, a senior Chinese central bank official said. Yi Gang, deputy governor of the People's Bank of China, said leaders of the group has agreed on the ratio of contributions, operation mechanisms, governance structure and loan-to-value ratio of a Contingent Reserve Arrangement (CRA). AGENCIES