Growth slows to 4.4%

The country’s economy grew at its slowest pace in four years in the April-June quarter, dragged down by contraction in the manufacturing and mining sectors. The dismal data will pile more pressure on an embattled government to unveil fresh steps to reverse the slowdown.
Data released by the Central Statistics Office  showed the economy grew 4.4% in April-June, slower than the 5.4% in the year-ago period and 4.8% in the January-March quarter.
The 4.4% expansion was the slowest since the 3.5% posted in January-March 2009, and the weakest pace of growth since the global financial crisis.
The Indian economy, Asia’s third largest, has lost steam as policy delays, political uncertainty, high interest rates, global slowdown and stubborn inflation hurt expansion.

Replying to clarifications on his statement, the PM uncharacteristically tore into the opposition. He emphasized that building consensus was not just the responsibility of the government but also that of the opposition. He said the BJP had never reconciled itself to the fact that it was voted out of power in 2004.
This invited an immediate and sharp retort from leader of the opposition Arun Jaitley. This led to bedlam with Mani Shankar Aiyar demanding that Jaitley be expelled from the House. His remarks enraged BJP MPs.
Earlier, in his statement to the Lok Sabha, the PM admitted that domestic factors had compounded an adverse global situation in weakening the rupee, but insisted that the situation was likely to improve in the coming months. Maintaining that this “optimism” was not misplaced, he said the effects of a good monsoon, the kicking in of the effects of reform measures taken recently and ironically, the depreciation of the rupee itself, would help the economy recover.
While the PM did not elaborate too much on what the domestic factors responsible for the currency crisis were, he did mention “a collapse in iron ore exports” as one of them without explicitly referring to the Supreme Court-imposed ban.
Singh expressed confidence that the fiscal deficit would be kept below the target of 4.8% of GDP and that the current account deficit (CAD) would not exceed $70 billion in the current year compared to $90 billion in 2012-13. Over the medium term, he said, the effort would be to keep the CAD to about 2.5% of GDP against the 4.8% actually registered in 2012-13.
Arguing that some of the fall in the rupee’s value was “natural” given the relatively higher inflation rate in India than in US, Singh said the depreciation “can be good for the economy as this will help to increase our export competitiveness and discourage imports”. Some export sectors, he said, had already become more competitive and the full effects in terms of boosting exports would be felt in the rest of the fiscal.
The fundamentals of the Indian economy were still strong and this would ultimately lead to a stabilization of the rupee, Singh hoped.
Ruling out any capital controls or reversal of reforms, the PM on the contrary said the government would move forward on reforms. He, however, conceded that “we have the more difficult reforms to do such as reduction of subsidies, insurance and pension sector reforms, eliminating bureaucratic red tape and implementing Goods and Services Tax. These are not low hanging fruit and they need active political consensus.”
Lamenting the fact that many reform measures are held up for lack of political consensus, he added: “We need to forge consensus on such vital issues. I urge political parties to work towards this end and to join in the government’s efforts to put the economy back on the path of stable, sustainable growth.”