New Delhi: Strengthening the indications of an economic slowdown, India’s GDP grew by just 6.9 per cent in the second quarter this fiscal in comparison to 8.4 per cent expansion in the same period last year due to poor performance of the manufacturing, agriculture and mining sectors.
Gross domestic product (GDP) growth in the first half (April-September) of FY2011-12 also moderated to 7.3 per cent from 8.6 per cent in the first six months of the previous fiscal, as per the latest data released by the government today.
During the three-month period ending September 30, 2011, growth in the manufacturing sector dipped to a meagre 2.7 per cent from 7.8 per cent in the corresponding period of 2010-11.
Farm output also exhibited a similar trend and expanded by just 3.2 per cent during the quarter under review, compared to 5.4 per cent growth in the corresponding period last fiscal.
Mining and quarrying production declined by 2.9 per cent during the quarter under review, as against a growth of 8 per cent in the July-September quarter of the previous fiscal.
Growth in the construction sector also slowed to 4.3 per cent during the quarter from 6.7 per cent in the same period a year ago.
Furthermore, the trade, hotels, transport and communications segments grew by just 9.9 per cent in the quarter under review, as against 10.2 per cent expansion in the year-ago period.
However, electricity, gas and water supply grew by a robust 9.8 per cent in the July-September period, compared to 2.8 per cent growth in the corresponding year-ago period.
The other silver lining for the country’s economy was the services sector, including insurance and real estate, which grew by 10.5 per cent in the quarter ended September this year, compared to 10 per cent expansion in the corresponding period last year.
The Reserve Bank has projected that the Indian economy will grow by 7.6 per cent in 2011-12. It had earlier projected GDP growth in FY’12 at 8 per cent, but later revised the figure downward on account of the global slowdown and high domestic inflation.
The Indian economy expanded by 8.5 per cent in the 2010-11 fiscal.
As per the data released today, manufacturing growth slowed to 4.9 per cent during the first half this fiscal, in comparison to robust 9.1 per cent expansion in the first half of 2010-11.
The mining and quarrying sector also declined by 0.5 per cent during the April-September period, compared to a growth of 7.7 per cent in the same period last fiscal.
Furthermore, the agriculture, forestry and fishing sector grew by just 3.6 per cent in the first half, as against 3.7 per cent expansion in the first six months of 2010-11.
Growth of the construction sector stood at 2.7 per cent during the first six months of 2011-12, compared to 7.2 per cent in the corresponding period last fiscal.
The slowdown in the manufacturing sector and decline in mining and quarrying is likely to put further pressure on the government and the RBI at time when the economy is grappling with high interest rates.
India Inc has blamed the tight monetary policy, which has increased the cost of borrowings, for hindering fresh investment and slowing down industrial growth.
The RBI has hiked interest rates 13 times since March, 2010, to tame demand and curb inflation. Headline inflation has been above the 9 per cent-mark since December last year.
The government and the RBI have accepted that high interest rates may hurt the country’s growth prospects, but the apex bank has underlined that bringing inflation under control is its major agenda.