Economic growth has slumped to a 10-year low in the second quarter of the current fiscal, as private consumption eased and investments largely remain subdued.
The Indian economy grew 5.3 per cent in the quarter ending September 2012, lower than the 5.5 per growth in gross domestic product (GDP) clocked in the first quarter, with both the farm and manufacturing sectors recording a deceleration. GDP growth in the first six month of the current fiscal was recorded at 5.4 per cent, sharply lower than the 5.8 per cent growth rate projected by the RBI for the entire year, according to data released by the Central Statistical Organisation on Friday.
Finance minister P Chidambaram termed the data, which was way below the 6.7 per cent clocked in the second quarter of 2011-12, as “below expectations”. What this means is to achieve the RBI’s projection of a 5.8 per cent growth for the entire year, the economy would have to show a strong rebound and grow by 6.2 per cent in the second half of the fiscal.
“The growth rate for the first half (H1) of the current financial year works out to 5.4 per cent as against 7.3 per cent in the H1 of 2011-12. Overall, the growth rate is below our expectations,” the finance ministry said in a statement, blaming the below normal rains in June and July for lower farm growth and poor manufacturing performance for low growth in industry.
During the three-month period ended September 30, the manufacturing sector grew marginally by 0.8 per cent, against 2.9 per cent growth in the same period of 2011-12, while the farm sector output expanded by just 1.2 per cent in the July-September period this fiscal against 3.1 per cent in the same period last year.
Chidambaram had recently scaled down the growth forecast for the fiscal to between 5.5 and 6 per cent as against the Budget estimate of 7.6 per cent (+/-0.25 per cent) for the fiscal. But the markets discounted the weak numbers and the BSE Sensex rose for the fourth straight day to gain 169 points and closed at 19,354. “It is a bit lower than expected. I certainly feel next half should be better. Numbers are not important, we can say it has bottomed out and is beginning to go up again,” Planning Commission deputy chairman Montek Singh Ahuluwalia said.
Analysts, however, argued though growth may have bottomed out,