India’s economic growth rate at 5.3% is ‘below expectations’

Monday, 3 December 2012 - 8:33pm India News Bulletin Desk

Finance ministry: India's growth rate at 5pc below expectation

Image: Wikimedia Commons (atulburnwal)

India, which was envied by most of the western economies for its double digit growth rate for the past few years, has received a severe economic setback as its growth rate plunged to 5.3%.

The Central Statistics Office (CSO) has released figures which showed that growth in GDP for the second quarter of 2012-13 is placed at 5.3%, down from the 6.7% recorded in the same quarter last year.

The Ministry of Finance has said that the growth rate is a little lower than the 5.5% achieved in Q1 of 2012-13. But it added that the figures are at the same level as achieved in Q4 of 2011-12.

The growth rate for the first half (H1) of the current financial year was also down at 5.4% from the 7.3% reported in the H1 of 2011-12.

“Overall, the growth rate is below our expectations,” said the finance ministry.

At the sector- level, agriculture and allied sector registered a growth rate of 1.2%, down from 3.1% the previous quarter; the industry sector registered a growth rate of 2.8%, down from 3.7% in the previous quarter. The fastest growing sector -- services sector – also reported a drop from 8.8% in the previous quarter to just 7.2% this quarter.

The finance ministry blamed the poor rainfall between June-July for the poor growth in the agriculture sector. The impact on the khariff crop (the monsoon crops such as bajra, maize, jowar etc.) has pulled down the growth rate, according to the ministry.

In the Industry sector, growth has been lower mainly on account of a reduction in growth of manufacturing sector from 2.9% in Q2 of 2011-12 to 0.8% in the second quarter of the current year.

Although the growth rate of services sector showed some improvement in Q2 of 2012-13 vis-à-vis the Q1, it still remains below the trend level, the ministry said.