Economic growth slows down to 6.1% in Q3; lowest in 2 years

NEW DELHI: India’s economic growth rate slipped to 6.1 percent in the third quarter this fi scal, lowest in more than 2 years due to poor performance of the manufacturing, mining and farm sectors. The Gross domestic product (GDP) growth the in third quarter (October- December) last fi scal was 8.3 percent, as per the latest data released by the government on Wednesday. GDP in April-December period also moderated to 6.9 percent from 8.1 percent in the fi rst nine months of 2010-11. During the quarter ending December 31, growth in the manufacturing sector dipped to a meagre 0.4 percent from 7.8 percent in the corresponding period of 2010-11. Farm output also exhibited a similar trend and expanded by just 2.7 percent during the quarter, compared to 11 percent in the corresponding period last fi scal. Mining and quarrying production contracted by 3.1 percent during the quarter under review, as against a growth of 6.1 percent in Q3 of last fi scal. Growth in the construction sector also slowed to 7.2 percent during the quarter from 8.7 per cent in the same period a year ago. Furthermore, the trade, hotels, transport and communications segments grew by just 9.2 percent in the quarter under review, as against 9.8 percent expansion in the year-ago period. However, electricity, gas and water supply grew by robust 9 percent in the October-December period, compared to 3.8 percent growth in the corresponding period last fi scal. The growth of the services sector, including insurance and real estate, slowed to 9.9 percent in the third quarter ended December, compared to 11.2 percent expansion in Q3 of 2010-11. The Central Statistical Organisation has pegged the GDP growth for 2011-12 at 6.9 percent, while the Prime Minister’s Economic Advisory Council (PMEAC) expects that it would be 7.1 percent. The Indian economy expanded by 8.4 percent in 2010-11. As per the data released today, manufacturing growth in the 9-month period ending December, slowed to 3.4 percent as compared to 7.6 percent during the same period a year ago. During April-December, output of mining and quarrying sector declined by 1.4 percent as against a positive growth of 6.7 percent in same period last fi scal. Furthermore, the agriculture, forestry and fi shing sector grew by just 3.2 percent in the nine month period, as against 6.8 percent expansion a year ago. Growth of the construction sector stood at 4.2 percent during the 9-month period, compared to 7.7 percent in the same period last fi scal. The slowdown in the manufacturing sector, coupled with decline in mining and quarrying, is likely to put pressure on the Reserve Bank of India to cut interest rate at its mid-quarter monetary policy review on March 15. Finance Minister Pranab Mukherjee too, in his Budget for 2012-13, to be presented on March 16 in Lok Sabha, is expected to announce steps for arresting economic slowdown. India Inc has been blaming RBI’s tight monetary policy, which has increased the cost of borrowings, for hindering fresh investments and slowing down the industrial growth.