The Telegraph
Saturday , May 31 , 2014
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At 4.7%, growth bereft of jolt or joy

New Delhi, May 30: India’s economy grew 4.7 per cent in 2013-14, picking up marginally from its decade-low growth of 2012-13 but staying below 5 per cent for the second year running. In 2012-13, the economy had grown 4.5 per cent, its worst in a decade.

In the fourth quarter of 2013-14, the economy expanded at 4.6 per cent against 4.4 per cent a year ago.

A good monsoon-fed Kharif crop and a bumper winter crop saw farm growth rebounding to 4.7 per cent in 2013-14 compared with a mere 1.4 per cent in the previous year. Farm output expanded 6.3 per cent in the January-March quarter of 2013-14 compared with 1.6 per cent in the same period of 2012-13.

Strong performance in the services sector — finance, insurance, realty and business services — which grew nearly 13 per cent in the whole year compared with 10.9 per cent a year ago, also helped to improve the growth statistics.

Services expanded 12.4 per cent in the fourth quarter against 11.2 per cent a year earlier.

Manufacturing remained a sore area, shrinking 0.7 per cent during the year compared with a modest growth of 1.1 per cent a year ago. The sector declined 1.4 per cent in the fourth quarter against a growth of 3 per cent a year ago.

Delays in environmental clearances, which among other things had held up an estimated investment of Rs 55,000 crore over the last two years, maintained their pressure on mining, which shrank 1.4 per cent in 2013-14. The sector had seen a 2.2 per cent dip in production in 2012-13.

It contracted 0.4 per cent in the January-March quarter against a decline of 4.8 per cent in the same period of 2012-13.

However, business associations that were openly critical of the previous government’s policy logjam and inability to kick-start growth are not complaining today.

“Various indications point out that growth deceleration has bottomed out and the economy could now be on a recovery course,” Ficci president Sidharth Birla said.

Rebound hope

Industrialists and economists feel that with a business-friendly government in place, they can expect decisions to unlock investments stuck in red tape.

“The governmental actions will definitely have a positive impact on the investment sentiment. Going forward, the emphasis has to be on effective implementation and timely action,” Birla said.

Prime Minister Narendra Modi has already asked his ministers to give him a 100-day agenda which should focus on reviving growth by emphasising on infrastructure building, while containing runaway inflation.

Aditi Nayar, senior economist with rating agency Icra, said, “The structural issues contributing to the stagnation in the manufacturing sector need to be addressed urgently. Well-designed policies to simultaneously enhance skill development and ensure job creation are crucial to realise India’s long term growth potential and make the demographic dividend a success.”

“We expect a mild improvement in the pace of growth from 4.7 per cent in 2013-14 to 5.0-5.5 per cent in 2014-15, factoring in a muted pickup in manufacturing and investment activity in second half of the current fiscal,” she added.

Fiscal deficit

Fiscal deficit in 2013-14 stood at 4.5 per cent of GDP, lower than 4.6 per cent projected in the revised estimate, mainly on account of curbs on government expenditure.

“The problem is that India has little or no scope for spending its way out of trouble as its fiscal deficit or the gap between earnings and spending and thereby government’s debt remains high,” said top finance ministry officials.