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.
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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”.
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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.