Economic growth slides to 4.4% in Q1, lowest in four years
New Delhi: Pulled down by a drop in mining and manufacturing output, economic growth in the April-June quarter slid to 4.4 percent, prompting industry to demand coordinated action by the government and the RBI to boost the economy.
Growth was at the slowest pace since the 2008 financial crisis, with all but one of the eight sectors registering a lower rate of expansion or contraction.
The country's gross domestic product (GDP) had expanded by 5.4 percent in the April-June quarter of the last fiscal. On a sequential basis, the growth rate declined from 4.8 percent in the January-March period of 2012-13.
"The GDP figures for first quarter clearly show that the economy continues to be in the throes of a slowdown," CII Director General Chandrajit Banerjee said. "A coordinated effort from the government and the RBI is required to ensure that this vicious cycle is broken."
The biggest drag on growth came from mining and quarrying, which contracted by 2.8 percent in the April-June quarter against a 0.4 percent growth in the same period of the last fiscal, according to data released today by the Central Statistical Organisation (CSO).
Contraction in the manufacturing sector widened to 1.2 percent from 1 percent a year earlier.
Other sectors, including construction, power generation, hotels and transport, showed a marked deceleration in growth.
Farm sector output expanded by 2.7 percent compared with 2.9 percent in the corresponding period of the last fiscal.
A Deloitte expert said quarterly GDP may not look up in the near future unless structural deficiencies in the industry sector are addressed and indicated that the numbers could have been worse.
"US recovery has partially helped prop up services as we are seeing from the finance, insurance and business sector," said Anis Chakravarty, senior director at Deloitte in India.
The growth rate in the services sector, including financing, insurance and real estate, stood at 8.9 percent against 9.3 percent in same quarter of 2012-13.
Growth in electricity, gas and water supply was 3.7 percent compared with 6.2 percent.
The construction sector expanded 2.8 percent as against 7 percent in the year-ago period.
The trade, hotels, transport and communications segment grew at 3.9 percent against 6.1 percent.
Only the community social and personal services sector registered a higher growth of 9.4 percent compared with 8.9 percent.
Prime Minister Manmohan Singh, speaking in Parliament today before the GDP data was released, exuded confidence that growth in the current fiscal will rise to 5.5 percent, up from a decade's low of 5 percent in 2012-13. He said even though growth has slowed down in recent quarters, it is expected to pick up.
The government top brass is hopeful that the GDP numbers would be better in the coming quarters of the current fiscal.
"We were aware that the growth rate has been slowing down. We never felt that in the first quarter there was much sign of an improvement...It is in the second half of the year that we might see an improvement," Planning Commission Deputy Chairman Montek Singh Ahluwalia said.
According to Ahluwalia, improvement in the second quarter of this fiscal would be "mainly because of the number of steps that have been taken in the last two or three months."
Commenting on the data, Economic Affairs Secretary Arvind Mayaram said, "Growth in the second quarter will improve and growth in the third and fourth quarters would be better."