GDP logs slowest quarterly growth in 3 years

India’s economy has logged its slowest pace of quarterly expansion in three years with gross domestic product (GDP) rising by a mere 6.1 percent in the quarter ended December, official data showed Wednesday.

The economy had grown 8.3 percent in the previous corresponding period.

Higher interest rates, rising inflation, the global economic turmoil rubbing off on the country and a slew of policy issues curbing investment sentiment has contributed to the economy’s dismal performance.

This is the seventh consecutive time that quarterly growth has slipped. It had risen by 6.9 percent in the quarter ending September and 7.7 percent in the three-month period before that.

Manufacturing was hit hard, logging a meagre 0.4 percent growth in the quarter under review, compared to 7.8 percent in the previous corresponding period, according to data released by the ministry of statistics and programme implementation.

Mining was another sector hit badly and contracted by 3.1 percent. It had registered a growth of 6.1 percent in the October-December quarter of 2010-11.

Agriculture also saw a sharp decline at 2.7 percent but that was mostly because of a high base as the sector had grown 11 percent in the year-ago period. Financial services grew at 9 percent in the quarter, while social and personal services logged a 7.9 percent growth.

The latest figures will come as a disappointment to policy-makers in the run up to the budget. The scenario is not likely to change much in the current quarter as well since, according to the advanced estimates given by the government, the GDP is expected to increase by only 6.9 percent for the whole year.

“With fourth-quarter estimates also being weak, it is virtually certain that the GDP numbers for the current fiscal will stand below 7 percent,” said Anis Chakravarty, Director & Senior Economist, Deloitte Haskins & Sells.

“It is important that policy-makers now re-focus on the structural constraints plaguing the economy and dragging growth down. Unless strong measures are taken to have an implementable plan for revival of the manufacturing sector, it is unlikely that GDP numbers in the coming quarters will improve noticeably,” he added.