It was a double whammy for the country's fiscal growth on Friday as according to key statistics released by the Government, the Indian economy grew at a sluggish 4.7 per cent in the third quarter of the current financial year, while owing to a poor show by coal, petroleum refinery products and natural gas, the industrial output grew at 1.6 per cent, lower than 8.3 per cent growth recorded in the same month last year.
Expressing concerns over the state of the economy, India Inc said downbeat growth as well as core sector data was bound to erode the cautiously optimistic mood prevalent in the industry of late. The country's gross domestic product (GDP) had expanded 4.8 per cent in the July-September quarter and 4.4 per cent in April-June. Growth in the first nine months (April-December) was 4.6 per cent compared with 4.5 per cent in the same period a year ago.
The economy had expanded 4.4 per cent in the third quarter of 2012-13, according to official data released by the Central Statistics Office (CSO). Given the performance in the first nine months and GDP growth of 4.9 per cent projected by the CSO in its advance estimates for this financial year, the economy must expand 5.7 per cent in the fourth quarter ending March.
Farm sector output expanded 3.6 per cent in October-December compared with 0.8 per cent in the corresponding period of the previous financial year. The sector grew 3.6 per cent in April-December. The manufacturing sector declined 1.9 per cent in the third quarter as against a growth of 2.5 per cent a year ago. The output of the sector contracted 0.7 per cent in the first nine months. Growth in electricity, gas and water supply was 5 per cent compared with 2.6 per cent a year earlier and it touched 5.5 per cent in the April-December period.
The construction sector expanded 0.6 per cent as against 1 per cent in the year-ago period. During April-December, the sector grew 2.5 per cent. Meanwhile due to poor show by coal, petroleum refinery products and natural gas industrial output growth came in at 1.6 per cent, lower than 8.3 per cent growth recorded in the same month last year. The Index of Eight Core Industries grew 2.1 per cent in December.
The eight core industries - fertilisers, cement, steel, electricity, crude oil, coal, petroleum refinery products and natural gas - have a combined weight of about 38 per cent in the Index of Industrial Production (IIP). Core sector growth was 2.4 per cent during the April-January period of this financial year compared with 6.9 per cent in the same period of 2012-13. Coal output contracted 0.7 per cent in January. Petroleum refinery production registered a fall of 4.5 per cent and natural gas output shrank 5.2 per cent. Expressing concerns over the state of the economy, India Inc said that downbeat growth as well as core sector data was bound to erode the cautiously optimistic mood prevalent in the industry of late.
"What is especially worrisome is that growth remains in the sub five per cent level for the fifth consecutive quarter as sub-optimal output of the mining and manufacturing sectors continue to plague the economy," CII Director General Chandrajit Banerjee said. Ficci President Sidharth Birla said, "the GDP growth has disappointed and added to concerns on achieving the full year target of 4.9 per cent."
"Manufacturing sector is bleeding with a compression in demand and low consumer confidence. It must be lifted. Only then will investment take place," Assocham President Rana Kapoor said. "Policy makers should consider initiatives to step up investments from the private sector and raise funds through the public-private partnership model by making concession agreements attractive and defining exit modes," FIEO President M Rafeeque Ahmed said.
"The GDP growth is disappointing as the industry was anticipating higher growth in the second half of the current financial year," PHD Chamber of Commerce President Sharad Jaipuria said. On the core sector performance, Assocham Secretary General D S Rawat said: "It implies that infrastructure deficiency has further widened in the current fiscal". "The issues linked to the pricing of gas and coal, problems associated with the power distribution policy and continued monopoly of public sector in coal production need strong policy action," he added.