New Delhi: India's economy is estimated to grow by 5% in 2012-13, its slowest pace in a decade, dragged down by dismal performance in the farm, manufacturing and services sectors, piling fresh pressure on the government to devise urgent growth-boosting policies to reverse the trend.
Data released by the Central Statistics Office (CSO) on Thursday showed the economy is estimated to grow by 5% in 2012-13, sharply below the 6.2% posted in the previous year and below the estimates of the finance ministry and the RBI which ranged from 5.5 to 5.9%. This will be the slowest pace of growth since 2002 -03 when the economy grew by 4%.
The provisional estimates showed the farm sector is likely to grow 1.8% in 2012-13 compared to a 3.6% expansion the previous year, while manufacturing is seen expanding 1.9% compared to 2.7% growth in the yearago period. The services sector, which accounts for about 60% of the GDP, is likely to grow 6.6% compared to the 8.2% growth in the previous year. Experts seek reforms to spur growth Fast-Track Measures To Revive Investment & Boost Sentiment, Urges India Inc
New Delhi: The Indian economy is expected to grow by 5% in 2012-13, with the services sector, which has been hit by the global economic slowdown since 2000-01, likely to grow 6.6%.
The CSO's advance estimates are based on anticipated level of agricultural and industrial production, analysis of budget estimates of government spending and performance of key sectors like railways, transport other than railways, communication, banking and insurance available so far, the CSO said.
Policymakers were disappointed by the data but said the government was watching the situation and taking steps to revive growth. The finance ministry said it hoped the economy would end the year on a better note and the government would continue to take steps to revive growth.
"As per practice, this projection is based on extrapolation of numbers till November 2012. Since then, leading indicators have turned up, suggesting some hope that we will end the year on a better note," the government said in a statement, adding that sectors such as trade and transport, which are related to industry, would also tend to get revised upwards if growth outcomes are better.
"It may be recalled that the RBI, in its outlook released on January 28, 2013, had projected a growth rate of 5.5%. The CSO's growth estimate, no doubt, is below what we at the finance ministry had expected it to be. We are keeping a watch on the situation. We have taken and will continue to take appropriate measures to revive growth," the government said.
But economists said they would revise downwards their growth estimates and called for sustained reforms to boost growth. "Taking into account the 5% GDP estimate for FY13 (2012-13) and revisions to past data, we are revising our FY14 (2013-14) GDP estimate down to 5.7% from 6.2%," Rohini Malkani, economist at Citigroup India, said in a note.
"While the government has taken several measures since September 12 and growth is likely to have bottomed out in Q3 of FY13 (Oct-Dec), continued action from all policymakers is needed to reverse the decline across all the macro variables," Malkani added.
The International Monetary Fund on Wednesday projected growth at 5.4% in 2012-13 but said it should pick up to 6% in 2013-14. It said in a report that continued implementation of measures to facilitate investment and slightly stronger global growth should deliver a modest rebound in the near term and raise medium-term growth to the upper range of potential estimates.
India Inc stepped up calls to fast-track measures to revive investment and boost sentiment. "Though this was anticipated, the number is astonishingly low. Several overriding risks continue to remain dominant and it is important that we firm up steps to give a thrust to the flagging growth," said Naina Lal Kidwai, president of Ficci. "The need to revive investment sentiment has become indispensable," she added.
Ratings agency Crisil said an improvement in consumption demand over the next fiscal would help in lowering inventory build-up and increasing capacity utilization, but private investments need to be pumped up to raise and sustain growth beyond 2013-14. "Revival of private consumption in 2013-14 will be aided by higher agricultural growth (assuming normal monsoon), pre-election government spending and lower interest rates," it said.
Times View: India needs to grow at 8% or more Agrowth rate of 5% at a time when several major economies of the world are struggling to grow at all may not seem like a complete disaster, but it actually is. Unlike the developed economies, India still has a substantial chunk of its population below the poverty line and many more living barely above that level. It desperately needs, therefore, to grow at 8% or more on a consistent basis if those numbers are to be rapidly brought down. Government policy may be only one of several factors determining the economy's growth rate, but importantly it is one that can be controlled. That is why it is imperative that the government quickly gets its act together and ushers in the kind of reforms that will revive confidence in the economy.  |
