CII concerned about the downward trend in Indian GDP growth rate
While the 5.5% growth was marginally higher than the 5.3% growth seen in the previous quarter ending March, the Indian GDP growth rate is much lower than the rate seen in the previous years and is also behind its rival China’s GDP growth rate.
If the Indian economy continues its downward growth spiral due to steep decline in the growth of gross capital formation, then the opportunities for the revival of economic growth will be severly hampered, warned the CII, Confederation of Indian Industries.
“The GDP numbers leave no doubt about the criticality of the situation and we once again appeal for a coordinated monetary and fiscal intervention to address this deteriorating situation,” said Chandrajit Banerjee, director general of CII.
The CII chief called for the Indian government to cut the repo rates and also called for it to implement the second phase of JNNURM (Jawaharlal Nehru National Urban Renewal Mission), the project dedicated to the redevelopment of India’s cities.
JNNURM will provide an impetus to investment and consumption demand, according to the CII.
“For a pick-up in rural demand, the government could consider implementing the ambitious Bharat Nirman programme,” Banerjee advised.
“The revision in GDP numbers has also created concern for industry especially in a global environment where investment sentiments are low,” he said.
Such large scale revision in GDP numbers can affect the certainty in investment decisions, the industry organisation warned.
The growth in the service sector in India dropped to just 4% year-on-year as against the impressive 13.8% growth seen in the same period last year.
India's economy is expected to grow 6.7% in the current financial year (April 2012 – March 2013), according to some experts. But in July, the Reserve Bank of India slashed India’s growth forecast for this fiscal year from 7.3% to 6.5%.
