The Indian economy expanded at a slower than expected rate in the December quarter due to disappointing performances by the mining and manufacturing sectors, adding to the policy headaches of the embattled government heading for national elections.
Data showed the economy grew an annual 4.7% in the October-December quarter, marginally slower than 4.8% in the previous and below market expectations of 4.9%.
The economy had expanded 4.4% year-on-year in the April-June quarter while the statistics office has forecast 4.9% growth for 2013-14. Economists said it would be difficult to meet the 4.9% growth for the full year given the trend so far in the three quarters. Asia’s third-largest economy has faced several headwinds and growth has slowed to a decade low of 5% in 2012-13. Slowing growth and stubborn inflation have put the government on the back foot despite some late measures to revive the faltering economy.
The sluggish data adds to the woes of the government ahead of the national elections and is expected to provide fresh ammunition to its opponents who have blamed the UPA coalition for the sharp slowdown in growth. Policymakers were upbeat about a rebound in the second half of the fiscal year but the data still appears grim.
The manufacturing sector continued to be under stress declining 1.9% in the December quarter compared to a growth of 1% in previous quarter while the mining sector which has been hit by regulatory delays fell 1.6% in the October-December period compared to a decline of 0.4% in the July-September quarter.
The farm sector grew 3.6% in the October-December quarter, slower than the 4.6% in the previous quarter while the services sector, which accounts for nearly 60% of the economy, gathered some pace expanding 7.6% in the December quarter compared with the 6.0% growth in the previous quarter.
India Inc reiterated calls for cutting interest rates to boost growth while others called for urgent steps to boost growth and confidence.
Other industry groups said if growth does not revive it would pose several challenges.
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