Economic growth falls to 4.7%; dashes revival hope
New Delhi: Dragged down by contraction in manufacturing and mining sectors, India's economic growth slowed to 4.7 percent in the third quarter of the current financial year from 4.8 percent in the previous quarter, government data showed Friday.
This is the fifth consecutive quarters of below five percent growth in the Indian economy. The economic growth had slumped to 4.4 percent in the first quarter of the fiscal and then revived to 4.8 percent in July-September period.
According to data released by the Central Statistics Office (CSO), manufacturing output shrunk by 1.9 percent, while mining production contracted by 1.6 percent in October-December quarter of the current fiscal.
Services sector grew at 7 percent and farm sector expanded by 3.6 percent during the quarter under review.
Quarterly GDP at factor cost at 2004-05 prices for Q3 of 2013-14 is estimated at Rs.14.8 lakh crore, as against Rs.14.1 lakh crore in the corresponding quarter of the previous year, showing a growth rate of 4.7 percent, the CSO said.
The latest figure is sharply down from the government's claims and even private estimates. It dashes the hope of an early revival in the Asia's third largest economy.
In the interim budget presented earlier this month, Finance Minister P Chidambaram had expressed hope that the economic growth would recover to at least 5.2 percent in the second half of 2013-14 from 4.6 percent posted in the first six months of the fiscal.
The CSO had recently pegged the growth for the current fiscal at 4.9 percent as compared to 4.5 percent expansion recorded in the previous year.
Analysts said considering the sluggish numbers for the first three quarters, it would not be possible to achieve 4.9 percent growth for the whole fiscal as estimated by the CSO and claimed by the finance minister in the interim budget.
To achieve the projected 4.9 percent growth for the whole fiscal, the GDP now must expand by 5.7 percent in the fourth quarter or January-March 2014 period.
"The GDP growth figure for the third quarter disappoints and adds to concerns on achieving the full year target of 4.9 percent as brought out by the CSO earlier," said Sidharth Birla, president of industry body FICCI.
"These numbers indicate that the slowdown is entrenched in the economy and we may have to wait to see if lack of growth has really bottomed out," he said.
Birla said the prolonged slowdown in growth will have serious implications for employment generation and unless the trajectory is reversed soon.
"Today’s figure would erode some of the cautious optimism that was starting to become visible over the last two months,” said the Confederation of Indian Industry (CII), expressing disappointment over the quarterly number.
"With the country heading for general elections, it is not expected that key economic legislations would get transacted. However, this is an opportune time to take care of procedural simplifications, which would improve the ease of doing business in India and make the environment investment friendly,” the CII said.
Gross fixed capital formation as a share of the GDP fell to 27 percent in October-December quarter from 29.4 percent in the previous quarter.
Private final consumption expenditure registered a sluggish 2.5 percent expansion during the quarter under review.