Slowdown pulls down India’s growth to 5.3 percent (Lead)February 27th, 2009 - 2:06 pm ICT by IANS
New Delhi, Feb 27 (IANS) The fears of a sharp slowdown in India were confirmed Friday, with official data showing economic growth at just 5.3 percent for the third quarter of the current fiscal - the slowest since 2003 - against 8.9 percent in the like period the previous year.
The growth in gross domestic product (GDP) has dipped from 7.6 percent for the second quarter and 7.9 percent for the first quarter, showed statistics released by the Central Statistical Organisation (CSO).
Overall, the growth for the first nine months of the current fiscal has dropped to 6.9 percent, as opposed to the impressive 9 percent economic expansion in the corresponding period last fiscal, the data showed.
The latest growth figures now put a question mark over India being able to log the 7 percent or higher growth in the current fiscal year, as predicted by the government and projected by the central bank.
The lower growth numbers also come as a major shock for the Congress-led United Progressive Alliance (UPA) government which will face national elections soon.
What has come as a major cause for worry is the 2.2 percent decline in farm output and 0.2 percent drop in manufacturing, even as construction logged a much lower growth of 6.7 percent in the quarter under review.
Economic activities that registered reasonable growth in the third quarter were mining (5.3 percent), hospitality, transport and communications (6.8 percent), banking, insurance and realty (9.5 percent) and government services (17.3 percent).
“One of the reasons for the decline is the slide in agriculture. A negative 2.2 percent does have an impact,” said D.K. Joshi, the principal economist with the rating agency Credit Rating Information Services of India Ltd (Crisil).
“Yet, one must not forget that the decline is on a very high base of nearly 7 percent last year,” Joshi told IANS. “All sectors have shown weakness, but manufacturing has a greater impact because of its overall weight.”
Joshi predicted that the Indian economy would grow at between 6.5 percent and 7 percent this fiscal. “Closer to 6.5 percent, I would say.”