New Delhi, May 31: India’s economic growth slumped to its lowest level in nine years in the first three months of 2012, marking a dramatic slide in the fortunes of a country whose economy was boasting nearly double-digit growth before the global recession.
The economy had grown 5.3 per cent in the last quarter from a year earlier, a sharp slowdown from 9.2 per cent growth in the last quarter of the previous year, government data showed.
Finance minister Pranab Mukherjee blamed the poor performance of the manufacturing sector, which shrank 0.3 per cent from a year earlier, for the slowdown.
For the full year, the economy clocked a growth of 6.5 per cent, lower than the revised forecast of 6.9 per cent, prompting the industry to demand “immediate and bold action” to arrest the slowdown.
The decline in growth was witnessed in almost all segments of the economy, including agriculture, manufacturing, mining and construction.
Mukherjee said: “GDP growth is the lowest in contemporary period. It has been substantial because of the very poor performance of manufacturing sector.”
The Central Statistical Organisation has revised the growth rate for 2011-12 to 6.5 per cent from 6.9 per cent estimated earlier. This is the lowest growth rate since 2002-03 when the economy grew by 4 per cent.
The manufacturing output slowed to 2.5 per cent from 7.6 per cent in the previous fiscal.
“Economic growth is very disappointing. The performance of the current fiscal will depend on how well the industry picks up. We believe the growth rate in the current fiscal can be between 6.5 to 7 per cent,” chairman of Prime Minister’s Economic Advisory Council C. Rangarajan said.
A worried industry stepped up the demand for reduction in interest rates by the Reserve Bank in its mid-quarter credit policy to be announced on June 18 to boost growth.
CII director-general Chandrajit Banerjee said the government and the RBI should take “immediate and bold actions” to step up growth.
Disappointing GDP numbers pulled down the BSE sensex by over 140 points to 16,169, while the rupee touched a new low at 56.50 to a dollar amid concerns over sovereign debt issues in Eurozone countries.
According to the GDP data, the growth rate during 2011-12 slipped to 6.5 per cent from 8.4 per cent in the preceding two years.
Even during 2008-09, the year when the country was facing the impact of the global financial meltdown, the growth rate was higher at 6.7 per cent.
While the mining sector output turned negative to 0.9 per cent in 2011-12 as against the growth rate of 5 per cent a year ago, the agriculture sector growth rate moderated to 2.8 per cent from 7 per cent in 2010-11. The slowdown was also witnessed in sectors such as construction and services.
The GDP growth in the January-March quarter of 2010-11 was 9.2 per cent. The growth in the manufacturing sector during the quarter contracted to 0.3 per cent, from 7.3 per cent in the corresponding period of 2010-11.
Farm output also exhibited a similar trend and expanded by just 1.7 per cent during the quarter, compared to 7.5 per cent in the Q4, 2010-11.
However, mining and quarrying production growth stood at 4.3 cent during the quarter under review, as against a growth of a meagre 0.6 per cent in Q4 in 2010-11.
Growth in the construction sector slowed to 4.8 per cent during the January-March quarter of 2011-12 from 8.9 per cent in the year-ago period.
The trade, hotels, transport and communications segment grew by 7 per cent during in the quarter under review, as against 11.6 per cent expansion in the year-ago period.
However, electricity, gas and water supply grew by 4.9 per cent in the January-March period, compared to 5.1 per cent growth in the corresponding period in the last fiscal.
The growth of the services sector, including insurance and real estate, remained unchanged at 10 per cent in the fourth quarter ended in March.