GDP growth slows to 5.3 percent in January-March quarter 2011-12
- Thread starter Koovie
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well,....well.....
Several months ago, many people insisted that India growth will surpass CHina's soon.....
case is not as good as some people predicted just several months ago.....
Several months ago, many people insisted that India growth will surpass CHina's soon.....
case is not as good as some people predicted just several months ago.....
India's fourth quarter GDP grows at 5.3%, below expected 6.1%
NDTV, 31 May 2012 | 12:54 PM
India's economy grew at a dismal rate of 5.3 per cent in the quarter ended March 2012, against expectations of 6.1 per cent projected by a poll of 31 economists.
The rate of growth in gross domestic product (GDP) was 6.1 per cent in the December quarter.
The GDP numbers means that growth has now slowed for eight successive quarters through the three months ended March 2012. It is also the lowest GDP growth rate in 13 quarters; the last time India registered the same rate of growth was in the quarter ended December 2009, when the global financial system had all but collapsed in the aftermath of the bankruptcy filing by Lehman Brothers Holdings Inc.
GDP growth for the full year was 6.5 per cent, the slowest pace in three years, and well below the 8.4 per cent last year. The Reserve Bank of India had projected GDP growth of 6.9 per cent.
"This is still a respectable rate of growth in the context of the world situation. In the current year, would expert 6.5-7%," said C. Rangarajan, chairman of the Prime Minister's Economic Advisory Council.
However, the investment community is unlikely to share his optimism, particularly given legislative action that they see as being inimical to private enterprise in the country, such as the retrospective tax rule and flip-flops over FDI in sectors such as multi-brand retail and aviation.
"Investors have taken a backseat in India," said U R Bhat, managing director of Dalton Capital, adding that fiscal policies need to be tightened.
"We should expect a slowdown if investment does not pick up," he said.
"I'm hoping the power imbroglio can be sorted out. The other thing is if FDI is announced, and limits on FII inflow are eased, that could bring some life into the market," said Rajiv Kumar, secretary general of industry body Federation of Indian Chambers of Commerce and Industry, or FICCI.
Economic growth in the country has been shaken by a global economic slowdown, a currency at record lows and a government that has been unable to take strong action to curb the fiscal deficit as well as any meaningful reforms to further liberalise the economy.
The fiscal deficit came in at 5.9 per cent, in line with Finance Minister Pranab Mukherjee's estimates in his Union Budget for fiscal 2013. The revenue gap was at Rs5.2 lakh crore, with government spending zooming to Rs13.19 lakh crore.
The fiscal deficit is seen by most experts as a major piece in the Iindia's economy jigsaw, which now seems to be falling apart. High government spending -- largely on account of entitlement programmes and subsidies on key commodities -- has pushed up government borrowing, leaving less liquidity in the system for private enterprises.
Mr. Mukherjee, in his Budget for fiscal 2013, had projected a fiscal deficit of 5.1 per cent of GDP -- lower than last fiscal, but much higher than what most experts are comfortable with.
"Maintaining the fiscal deficit would act as a great stimulant for investment," Mr. Rangarajan told NDTV Profit.
"I agree much of what is happening is due to domestic factors, the external situation has affected but the basic reason has to be seen in domestic factors, it is important to recognize that," said Mr. Rangarajan.
The farm sector, which is the single largest employer in the country but one of the lowest contributors to absolute GDP, grew at a measly 1.7 per cent against 7.5 per cent in the corresponding period last fiscal.
But the key drag on the growth numbers were the industrial and services sectors -- both key drivers of growth -- which came in lower than expected, at 1.9 and 7.9 per cent against 7 and 10.6 per cent in the year-ago period. Indian industrial production accounts for about 15 per cent of GDP. Manufacturing contracted a sharp (-) 0.3 per cent from 7.3 per cent in the same period last year.
"Manufacturing has not been doing well, finally it has turned out that growth was below estimates, it has pulled down growth. We have to improve manufacturing, agriculture will do well this year since normal monsoon expected," said Mr. Rangarajan.
India's car sales, a leading indicator of growth, rose in April just 3.4 per cent from a year earlier, the weakest pace since a surprise 24 per cent drop in October and sharply below the 13.2 per cent annual growth in April 2011.
A sluggish global economy has also cut demand for India's goods overseas, despite the falling rupee, which means exports may also not grow enough to compensate for the domestic weakness.
The weak rupee—which has shed nearly 12 per cent from its 2012 high on pressure from imports ane the euro's weakness—adds to policymakers' headaches by elevating import costs, most notably for crude oil, 80 per cent of which is imported. It also adds to the burden and risk exposure of Indian firms with foreign-currency debts.
A number of Indian companies resorted to raising money overseas when the rupee was stronger, and liquidity conditions at home were tight as the RBI kept interest rates high to tame inflation. However, inflation has continued to grow, while growth has slowed, prompting suggesting that India might have entered a period of 'stagflation'.
High inflation, stoked in part by the falling rupee, leaves the central bank little room to cut interest rates further. The RBI in April delivered a larger-than-expected 50 basis point cut in benchmark rates but warned that it sees limited scope for more reductions. Mr. Rangarajan, however, said help from the government was unlikely, saying there is "scope for financial stimulus is very limited".
However, India's growth rate will still remain higher than many Western economies, which are either contracting or showing only anemic expansion.
The euro zone economy came to a standstill in the first quarter of the year, while the United States grew at an unimpressive 2.2 per cent annualized rate.
Other major Asian economies are also slowing down. China's economy grew 8.1 per cent in the first quarter from a year earlier, its weakest pace in almost three years.
(With inputs from Thomson Reuters 2012)
India's fourth quarter GDP grows at 5.3%, below expected 6.1%
NDTV, 31 May 2012 | 12:54 PM
India's economy grew at a dismal rate of 5.3 per cent in the quarter ended March 2012, against expectations of 6.1 per cent projected by a poll of 31 economists.
The rate of growth in gross domestic product (GDP) was 6.1 per cent in the December quarter.
The GDP numbers means that growth has now slowed for eight successive quarters through the three months ended March 2012. It is also the lowest GDP growth rate in 13 quarters; the last time India registered the same rate of growth was in the quarter ended December 2009, when the global financial system had all but collapsed in the aftermath of the bankruptcy filing by Lehman Brothers Holdings Inc.
GDP growth for the full year was 6.5 per cent, the slowest pace in three years, and well below the 8.4 per cent last year. The Reserve Bank of India had projected GDP growth of 6.9 per cent.
"This is still a respectable rate of growth in the context of the world situation. In the current year, would expert 6.5-7%," said C. Rangarajan, chairman of the Prime Minister's Economic Advisory Council.
However, the investment community is unlikely to share his optimism, particularly given legislative action that they see as being inimical to private enterprise in the country, such as the retrospective tax rule and flip-flops over FDI in sectors such as multi-brand retail and aviation.
"Investors have taken a backseat in India," said U R Bhat, managing director of Dalton Capital, adding that fiscal policies need to be tightened.
"We should expect a slowdown if investment does not pick up," he said.
"I'm hoping the power imbroglio can be sorted out. The other thing is if FDI is announced, and limits on FII inflow are eased, that could bring some life into the market," said Rajiv Kumar, secretary general of industry body Federation of Indian Chambers of Commerce and Industry, or FICCI.
Economic growth in the country has been shaken by a global economic slowdown, a currency at record lows and a government that has been unable to take strong action to curb the fiscal deficit as well as any meaningful reforms to further liberalise the economy.
The fiscal deficit came in at 5.9 per cent, in line with Finance Minister Pranab Mukherjee's estimates in his Union Budget for fiscal 2013. The revenue gap was at Rs5.2 lakh crore, with government spending zooming to Rs13.19 lakh crore.
The fiscal deficit is seen by most experts as a major piece in the Iindia's economy jigsaw, which now seems to be falling apart. High government spending -- largely on account of entitlement programmes and subsidies on key commodities -- has pushed up government borrowing, leaving less liquidity in the system for private enterprises.
Mr. Mukherjee, in his Budget for fiscal 2013, had projected a fiscal deficit of 5.1 per cent of GDP -- lower than last fiscal, but much higher than what most experts are comfortable with.
"Maintaining the fiscal deficit would act as a great stimulant for investment," Mr. Rangarajan told NDTV Profit.
"I agree much of what is happening is due to domestic factors, the external situation has affected but the basic reason has to be seen in domestic factors, it is important to recognize that," said Mr. Rangarajan.
The farm sector, which is the single largest employer in the country but one of the lowest contributors to absolute GDP, grew at a measly 1.7 per cent against 7.5 per cent in the corresponding period last fiscal.
But the key drag on the growth numbers were the industrial and services sectors -- both key drivers of growth -- which came in lower than expected, at 1.9 and 7.9 per cent against 7 and 10.6 per cent in the year-ago period. Indian industrial production accounts for about 15 per cent of GDP. Manufacturing contracted a sharp (-) 0.3 per cent from 7.3 per cent in the same period last year.
"Manufacturing has not been doing well, finally it has turned out that growth was below estimates, it has pulled down growth. We have to improve manufacturing, agriculture will do well this year since normal monsoon expected," said Mr. Rangarajan.
India's car sales, a leading indicator of growth, rose in April just 3.4 per cent from a year earlier, the weakest pace since a surprise 24 per cent drop in October and sharply below the 13.2 per cent annual growth in April 2011.
A sluggish global economy has also cut demand for India's goods overseas, despite the falling rupee, which means exports may also not grow enough to compensate for the domestic weakness.
The weak rupee—which has shed nearly 12 per cent from its 2012 high on pressure from imports ane the euro's weakness—adds to policymakers' headaches by elevating import costs, most notably for crude oil, 80 per cent of which is imported. It also adds to the burden and risk exposure of Indian firms with foreign-currency debts.
A number of Indian companies resorted to raising money overseas when the rupee was stronger, and liquidity conditions at home were tight as the RBI kept interest rates high to tame inflation. However, inflation has continued to grow, while growth has slowed, prompting suggesting that India might have entered a period of 'stagflation'.
High inflation, stoked in part by the falling rupee, leaves the central bank little room to cut interest rates further. The RBI in April delivered a larger-than-expected 50 basis point cut in benchmark rates but warned that it sees limited scope for more reductions. Mr. Rangarajan, however, said help from the government was unlikely, saying there is "scope for financial stimulus is very limited".
However, India's growth rate will still remain higher than many Western economies, which are either contracting or showing only anemic expansion.
The euro zone economy came to a standstill in the first quarter of the year, while the United States grew at an unimpressive 2.2 per cent annualized rate.
Other major Asian economies are also slowing down. China's economy grew 8.1 per cent in the first quarter from a year earlier, its weakest pace in almost three years.
(With inputs from Thomson Reuters 2012)
India's fourth quarter GDP grows at 5.3%, below expected 6.1%
May 31, 2012 6:58 am
Indian GDP growth slides to 5.3%
By James Fontanella-Khan in New Delhi
India's economic growth fell to a nine-year low in the first three months of 2012, a clear sign that the country's slowdown is deepening and affecting all sectors of the economy.
Sharp falls in the manufacturing and agriculture sectors led Asia's third-largest economy to grow only 5.3 per cent year on year in the quarter, compared with 9.2 per cent growth a year earlier.
This is the worst performance of India's economy since 2003 and far worse than the situation in the wake of the global financial crisis and the collapse of Lehman Brothers in late 2008, adding pressure on policy makers to take emergency actions to revive the country's growth.
"It's a disaster," said Rajiv Kumar, the secretary-general of the Federation of Indian Chambers of Commerce and Industry. "We are facing a crisis of slow growth and high inflation that is extremely concerning."
The disappointing growth data come as industrial production and exports plummeted in April（read：worse is yet to come）, due to a sharp slowdown in domestic as well as global demand for Indian goods.
India's economic difficulties are widely regarded as self-inflicted. Although Delhi often blames the eurozone sovereign debt crisis for India's woes, domestic economists argue that greater faults lie with those running the world's largest democracy.
"India's woes over the past two years, for the most part, may be traced back to one thing: weak policy," Jahangir Aziz, India chief economist at JPMorgan, wrote in the Indian Express. "The slowing growth, declining corporate investment, high and rising inflation, and now the sliding rupee, stem from the erosion of investor confidence in India's policies."
Parliament has been in a state of virtual paralysis since the Congress-led coalition government became embroiled in a wave of corruption scandals involving senior members of the cabinet. Key reforms – including allowing foreign investment in India's retail sector as well as passing a law to facilitate the acquisition of land to develop vital infrastructure projects – have been stalled in parliament for more than a year.
Economists last week forecast that growth would remain subdued this year. Goldman Sachs, Bank of America Merrill Lynch and Morgan Stanley downgraded their forecasts for India's gross domestic product growth in 2013, but still forecast that it would be above 6 per cent.
Analysts fear that slowing growth could further dampen investor confidence and lead global companies to search for safer investments, adding pressure on the already weak rupee.
"The India story has always been one of high growth, if this changes it could certainly affect investor sentiment and lead many to reconsider their position in India," said Anubhuti Sahay, a Mumbai-based economist at Standard Chartered.
The rupee hit a fresh record low of Rs56.5 against the dollar on Thursday. Over the past eight months it has depreciated about 25 per cent against the dollar – making it one of the worst performing emerging market currencies, according to BNP Paribas.
Industrialists complain that investment has been crippled by record high interest rates, in part blamed on the central bank's aggressive monetary tightening policy to reduce rampant inflation.
The Bombay Stock Exchange's benchmark index Sensex fell 1 per cent ahead of the GDP release, while India's benchmark 10-year bond yield dropped 3 basis points to 8.49 per cent.
Indian GDP growth slides to 5.3% - FT.com
Indian GDP growth slides to 5.3%
By James Fontanella-Khan in New Delhi
India's economic growth fell to a nine-year low in the first three months of 2012, a clear sign that the country's slowdown is deepening and affecting all sectors of the economy.
Sharp falls in the manufacturing and agriculture sectors led Asia's third-largest economy to grow only 5.3 per cent year on year in the quarter, compared with 9.2 per cent growth a year earlier.
This is the worst performance of India's economy since 2003 and far worse than the situation in the wake of the global financial crisis and the collapse of Lehman Brothers in late 2008, adding pressure on policy makers to take emergency actions to revive the country's growth.
"It's a disaster," said Rajiv Kumar, the secretary-general of the Federation of Indian Chambers of Commerce and Industry. "We are facing a crisis of slow growth and high inflation that is extremely concerning."
The disappointing growth data come as industrial production and exports plummeted in April（read：worse is yet to come）, due to a sharp slowdown in domestic as well as global demand for Indian goods.
India's economic difficulties are widely regarded as self-inflicted. Although Delhi often blames the eurozone sovereign debt crisis for India's woes, domestic economists argue that greater faults lie with those running the world's largest democracy.
"India's woes over the past two years, for the most part, may be traced back to one thing: weak policy," Jahangir Aziz, India chief economist at JPMorgan, wrote in the Indian Express. "The slowing growth, declining corporate investment, high and rising inflation, and now the sliding rupee, stem from the erosion of investor confidence in India's policies."
Parliament has been in a state of virtual paralysis since the Congress-led coalition government became embroiled in a wave of corruption scandals involving senior members of the cabinet. Key reforms – including allowing foreign investment in India's retail sector as well as passing a law to facilitate the acquisition of land to develop vital infrastructure projects – have been stalled in parliament for more than a year.
Economists last week forecast that growth would remain subdued this year. Goldman Sachs, Bank of America Merrill Lynch and Morgan Stanley downgraded their forecasts for India's gross domestic product growth in 2013, but still forecast that it would be above 6 per cent.
Analysts fear that slowing growth could further dampen investor confidence and lead global companies to search for safer investments, adding pressure on the already weak rupee.
"The India story has always been one of high growth, if this changes it could certainly affect investor sentiment and lead many to reconsider their position in India," said Anubhuti Sahay, a Mumbai-based economist at Standard Chartered.
The rupee hit a fresh record low of Rs56.5 against the dollar on Thursday. Over the past eight months it has depreciated about 25 per cent against the dollar – making it one of the worst performing emerging market currencies, according to BNP Paribas.
Industrialists complain that investment has been crippled by record high interest rates, in part blamed on the central bank's aggressive monetary tightening policy to reduce rampant inflation.
The Bombay Stock Exchange's benchmark index Sensex fell 1 per cent ahead of the GDP release, while India's benchmark 10-year bond yield dropped 3 basis points to 8.49 per cent.
Indian GDP growth slides to 5.3% - FT.com
p2prada
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Sh!t like this happens sometime. Manufacturing took a fall this time.
While our services is as strong as ever, our GDP growth always fluctuates rapidly because of manufacturing or mining. Sometimes agriculture too, but very rare like during droughts, and it is a small component of our GDP.
Edit: I think RBI is selling Dollars to our oil companies to strengthen the Rupee.
While our services is as strong as ever, our GDP growth always fluctuates rapidly because of manufacturing or mining. Sometimes agriculture too, but very rare like during droughts, and it is a small component of our GDP.
Edit: I think RBI is selling Dollars to our oil companies to strengthen the Rupee.
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I always tell that, we need to vote for Congress for getting a good growth. Silly warmongering, saffron terrorists are pulling down the growth
That aside, how is India going to achieve 7% growth again, let alone the double digit shit the UPA promised in the beginning??
That aside, how is India going to achieve 7% growth again, let alone the double digit shit the UPA promised in the beginning??
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Come on man. First they promised that the growth will be 7% last year and this year it will be around 7.5%. Then they said, this year it will be 7% and now we see 5.3% growth in jan-march. and you are saying it cant go below 6.5% . And in the end, at the max we will end up with a growth of 6%,that too if we are lucky.
Besides,for rains we have to depend the monsoons right? What if the monsoons fail? So how can we be sure to get an agri growth of 3.2%? I frankly dont believe we are heading in the right direction.
And all the dick measuring contests with the chinese economy and its impending doom, we have once again proved to the world that we speak a lot and overstate everything we have, by failing ourselves big time.
As CIR said, lets have a doom and gloom of Indian economy thread too, so that people stopped voting to saffron terrorists
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The economic/military soooooparr paaaawar.Let wait how long it takes the sooooper paaaawar india to
equal the pakistan's GDP growth rate .not long to go.Indians then can sleep piece-fully.
yes please. all the negative economy threads here are always about china, doom and gloom, china in recession, etc.
i don't think the moderators will allow a thread called "doom and gloom of india economy" though.
sob
Mod
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The Govt. has been aware of these datas, but has chosen to ignore them for reasons best known to them. Now the data is in public domain and still we have not heard anything concrete from the PM or the FM.
Looking at the Fiscal Deficit and the upward pressure of inflation there is not much that the RBI can do at this stage. It is all in the hands of the Govt. Mere austerity cuts will not do. There has to be deep cuts in the subsidy and if the Food Security Bill is not passed this fiscal it will certainly help the Govt. Plus modest increase in the price of Diesel,LPG and Kerosene should be carried out immediately.
The country cannot afford another Group of Ministers to be formed to tackle the crisis. This has now become a crisis of confidence and needs to addressed ASAP.
Looking at the Fiscal Deficit and the upward pressure of inflation there is not much that the RBI can do at this stage. It is all in the hands of the Govt. Mere austerity cuts will not do. There has to be deep cuts in the subsidy and if the Food Security Bill is not passed this fiscal it will certainly help the Govt. Plus modest increase in the price of Diesel,LPG and Kerosene should be carried out immediately.
The country cannot afford another Group of Ministers to be formed to tackle the crisis. This has now become a crisis of confidence and needs to addressed ASAP.
hey hey hey,
it's one quarter growth, and it is as low as we can get. pakistan is preparing it's begging bowl to the next trench of IMF. also the overall growth was 6.5%, still not that bad, as compared %2.7 ( or fardulent %3.7) .
it's one quarter growth, and it is as low as we can get. pakistan is preparing it's begging bowl to the next trench of IMF. also the overall growth was 6.5%, still not that bad, as compared %2.7 ( or fardulent %3.7) .
p2prada
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Yes. The Rupee is weak and 8% is still a good figure.8% growth in services。Strong as ever？
Academics had pegged the growth between 5.5% and 6.5% for the quarter. It went a bit lower than the lowest median, hence all the jittery reaction.
Overall, I think they are looking at a growth of 6.5-7% for the year. I maybe wrong with this figure though.
EDIT: High growth is not the answer to the economic hiccup we are facing. Low inflation is the key and Pranab understands that as he mentioned it several times himself.
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