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GDP growth drops below 7%; hard days ahead, says Pranab
Giving indications of what could possibly be the beginning of yet another slowdown, the economic growth fell to a nine-month low to 6.9 per cent for the July-September period, on the back of rising interest rates and global uncertainty mainly on account of Eurozone crisis.
Experts said given the situation we are in Government should fast-track reform policies and take measures to attract massive investments so that GDP growth does not affect even the next fiscal.
The gravity of the situation can be gauged from the very fact that during the corresponding quarter of the last fiscal, the economy had grown at 8.4 per cent. Add to this, the Finance Minister Pranab Mukherjee himself painted a gloomy picture of the near future.
“Now, hard days are coming. Present uncertainty with regard to global situation is creating concerns about FII and FDI flows. We will continue to adjust our policies according to the developments,” he said.
Although Mukherjee said the performance was not “all that disappointing” in view of the global uncertainty and high inflation, Planning Commission Deputy Chairman Montek Singh Ahluwalia projected moderation in growth rate in 2011-12 to 7-7.5 per cent, down from 8.5 per cent in the previous fiscal.
Despite the Finance Minister’s efforts to downplay the situation, the figures, as per the data released by the Government gave away the real picture.
Growth in eight infrastructure industries, an important indicator, plunged to 0.1 per cent in October this year from 7.2 per cent in the same month a year ago.
The October figures on the core sector, which accounts for about 38 per cent of the industrial production, convey a dismal outlook of the economic growth.
The growth rate in the manufacturing sector nosedived to 2.7 per cent in the July-September quarter from 7.8 per cent in the corresponding quarter of the previous fiscal.
Mining and quarrying sector output declined by 2.9 per cent, compared to a growth of 8 per cent in the second quarter of 2010-11. Agriculture production slipped to 3.2 per cent from 5.4 per cent in the corresponding period last fiscal. Cumulative GDP growth in the first half (April-September) of 2011-12 also moderated to 7.3 per cent from 8.6 per cent in the corresponding period last fiscal.
Amid the dismal scenario, Mukherjee stated that GDP growth could be around 7.3 per cent.
