At 6.5 per cent in 2011-12, it is below CSO estimate of 6.9 per cent
In tandem with a host of negative factors at home and abroad impacting the macro-economic environment, the country's GDP (gross domestic product) growth slumped to a nine-year low of 5.3 per cent during the fourth quarter (January-March) of 2011-12 as compared to a robust 9.2 per cent expansion in the same quarter of the previous fiscal.
The main culprit, as has been for the past few quarters, was the manufacturing sector which, along with the farm segment, fared dismally and dragged down the economic growth rate for 2011-12 to 6.5 per cent. At this level, it is not only way lower than the 8.4 per cent GDP growth achieved in 2010-11 but also marks a downward revision from the 6.9 per cent expansion estimated earlier for the fiscal year by the Central Statistical Organisation (CSO).
The scale-down in growth rate for 2011-12 to 6.5 per cent — the lowest since 2002-03 when the economy grew by four per cent — disappointed both the government and the industry but came as no surprise as indications of a steady slowdown have been there for quite some time.
The CSO data shows that the deceleration in growth has set into all the sectors of the economy. While the manufacturing sector has led the slowdown in output with a growth of 2.5 per cent during the fiscal, as compared to 7.6 per cent in 2010-11, other sectors such as agriculture, mining and construction also followed suit.
Disappointed with the dismal GDP figures, Finance Minister Pranab Mukherjee, however, expressed cautious optimism and pointed to some signs of recovery in some select sectors. However, India Inc. went on the aggressive and demanded a comprehensive package of measures to help revive the economy before it is too late.
In a statement, Mr. Mukherjee said: “GDP growth is the lowest in contemporary period. It has been substantially because of the very poor performance of manufacturing sector…The government would take all necessary steps to address imbalance on the fiscal front and on the current account. It would help in checking inflationary expectations and inspire confidence for improved capital inflows as well as recovery in domestic investment growth”.
Alongside, Mr. Mukherjee ascribed the slowdown to a mix of tight money policy, rising interest rates, weak global sentiments and environmental issues in the mining sector but felt that there would be an improvement soon as “most of the factors have bottomed out”.
The industry, however, demanded a revival package at the soonest to put the economy on a higher growth trajectory.
“A comprehensive 'Economic Revival Package' has to be announced at the earliest,” said CII Director General Chandrajit Banerjee said.
Calling for bold measures to tackle the situation, the apex chamber hoped that the political leadership would converge and their actions would be “swift and decisive”. While FICCI also stressed the urgent need for steps on the domestic front, Assocham President Rajkumar Dhoot said: “Investment environment should be improved and this may even call for some review of tax proposals and further relaxation of FDI norms”.
According to the GDP data, the mining sector output turned negative to 0.9 per cent in 2011-12 as against the growth rate of five per cent a year ago.
The farm sector growth also moderated to 2.8 per cent from seven per cent in 2010-11 while a slowdown was also witnessed in construction and services.
Keywords: Gross Domestic Product, economic growth, Indian economy
thanks raja manickam good comment, this is irony in India
Politicians become Ministers and they have to run extremely complex decisions
which they are not trained or prepared to do. They are professionals in getting
elected with populist policies. How can we expect them to make prudent financial
policies or create jobs. The opposition, activists, media is constantly scrutinizing
their every move. Even before the CAG report on coal become official, the activists
want PM and 14 ministers investigated. Now they would be spending their time and
the bureaucrats in the ministry defending the charges while not making any
decisions to move forward. It is easy to say there is paralysis; but we as citizens,
opposition, activists, media have created an environment for paralysis. Once elected,
give them space to work and not constantly put them on the defensive. It is
ridiculous in India as compared to mature democracies.
Indian e onomy has gone the full circle now. In 1991 Dr. Singh as the FM unshackled the
economy from the moribund and mediocre Hindu rate of growth to the league of high growth
major economies of the world. As prime minister Dr. Singh has presided over the demise of
high growth era and back to the usual Hindu rate of growth that Indian economy is used to
until the 90s. The reasons for this debacle many and well known. I think Dr. Singh knows
well what need to be done to revive the economy but he lacks the authority or power to make
it happen. But history may not judge him kindle given that he failed to put his foot down as
the prime minister in matters of corruption or economic reforms. Thanks to the indeciveness
and dithering on the part of Ms Sonia Gandhi, PM Singh and FM Pranab Mukherjee India's
growth story is now dead.
Dear Editor: Not many genuine tears are likely to be shed on account of a slowing growth rate.The high single digit growth rate has been consistently accompanied by high single/double digit inflation.For fixed wage earners this acclaimed growth has in fact hurt them more than helping them. Variable adjusted wage earners like our Finance and Home Minister have been the real beneficiaries and so they are worried about IMF and World Bank will preach/sermonise to them. High growth rates have led to higher disposable income for a select few % of the population which in turn has helped MNC's such as Coco Cola to report higher EPS. India is the only country where coke has reported a 20% growth on a case basis - does drinking more sweetened carbonated water help the country and its people to grow? It has also helped us to import additional war planes and thus subsidizing foreign employment - are we better off in terms of our day to day security by buying these costly toys?
Not only in India, China, US, Euroland, UK all show subdued growth;
may be the whole world in plunging into a Secular Recession,
irrespective of region. There are issue that's specific to India: For
example, India's Supreme Court is interfering with the Policy Decision
of an Elected Govt in place in the case of 2G allocation, and the
involvement of FDIs. When FDIs and FIIs see that there is no law and
order in India, and corruption is all pervasive, they sell their
assets and run away from Indian economy. This plunges the Rs, which
makes all imports like petrol and gold very expensive for the masses,
who go on indiscriminate strike paralyzing the economy, which in turn
affect all the relevant economic data.
Dr. MMS and his UPA alone can't do anything about this.. ALL political
parties must act in the best interest of "Most of the People for Most
of the Time". Unfortunately, Indian politics is terribly broken, and
people face the consequence.
Wait & watch :-)
The government was pitted against policy paralysis in a couple of years now due to corruption issues, agitation by the Anna team and obviously due to a hostile posture adopted by allies like TMC, DMK etc. The politicians are the main culprits for this economic messup. While the congress as a leading ruling political party was cornered by everyone including its own allies. The main opposition remained partisan in every issues and played the spoil sport and political opportunism. The nation as a whole suffered due to these politicians, who have very less vision on the nation and its prosperity and progress. They must answer to the nation.
Be optimistic. It happens in such a large country where government has to deal with a lot of issues.Scolding and blaming each and every time doesn't do any good. Show some faith in policymaker we will come out from this whole crisis situation very soon.
Further proof, if proof were needed, that India was never in safer,
cleaner and more prudent hands:
One cannot expect an organisation to perform poor when each of its
components is trying to gain at the cost of another...
Dr. Singh's Govt. is long being criticized for 'policy paralysis'
whether it be in corruption, foreign policy or economics. India cannot
expect to achieve robust growth when the politicians float 'shadow
economics' making scapegoat out of the investors and people.
Irrespective of whether or not Dr. Singh is honest, this is really a
shame for the architect of Indian Economy...
at least its growing :) . be optimistic.. a little change in policies and management will bring it to the track, but UPA have to show some resolve. They should work for India, not just for the sake of winning next elections.
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