Lowest since 2008 meltdown; contraction in mining and manufacturing
In a clear reflection of the ongoing economic downturn, GDP (gross domestic product) growth decelerated further to 4.4 per cent — the slowest pace of expansion since the 2008 meltdown — in the first quarter (April-June) quarter of the current fiscal. The pull-down, as has been the case in recent years, was mainly due to the dismal performance of mining and manufacturing. Such has been the steady slide in economic growth that from a GDP expansion of 5.4 per cent achieved in the first quarter of 2012-13, the performance during the April-June quarter this fiscal marked a further moderation on a sequential basis from 4.8 per cent in the fourth quarter (January-March) last fiscal.
Although the expectation in both official quarters and market participants was for a flattish growth during the first quarter of 2013-14, the actual performance turned out to be lower than anticipated, especially as seven out of the eight sectors either posted contraction in growth or a lower rate of expansion.
Pointing out that the GDP numbers for the first quarter clearly showed that the economy continued “to be in the throes of a slowdown,” CII Director General Chandrajit Banerjee, in a statement, said: “A coordinated effort from the government and the RBI is required to ensure that this vicious cycle is broken”.
Official reactions on the GDP growth figures, however, were not alarmist. Commenting on the numbers, Economic Affairs Secretary Arvind Mayaram said: “Growth in the second quarter will improve and growth in the third and fourth quarters would be better”. According to Planning Commission Deputy Chairman Montek Singh Ahluwalia, there would be improvement in the second quarter mainly because of the number of steps that have been taken in the last two or three months. However, GDP data released by the Central Statistical Organisation (CSO) revealed that mining and quarrying contracted by 2.8 per cent in the April-June quarter against a 0.4 per cent growth in the same period of the last fiscal.
Alongside, contraction in the manufacturing sector also yawned further to 1.2 per cent from one per cent in the same quarter a year earlier. These apart, other sectors such as construction, power generation, hotels and transport, also witnessed a significant deceleration in growth. The farm sector also posted a lower growth of 2.7 per cent as compared to a 2.9 per cent expansion in the same period of 2012-13.
Among others, the growth rate in the services sector, which includes financing, insurance and real estate, stood pegged at 8.9 per cent against 9.3 per cent in the same quarter of 2012-13. The growth in electricity, gas and water supply was also lower at 3.7 per cent compared to 6.2 per cent a year ago, as was the construction sector which expanded by 2.8 per cent as against seven per cent in the like quarter last fiscal.
The only sector that fared better was community, social and personal services sector which posted a higher growth of 9.4 per cent as compared to 8.9 per cent.