Q3 GDP growth rate slumps to 5.3 per cent

The Indian economy recorded a 5.3 per cent growth rate, the lowest over the last five years, during October-December period of current financial year, to mark the lowest growth in any quarter over the last five years. The economy was growing at 8.9 per cent in the same quarter of 2007-08.

Though the government and the Reserve Bank have taken several fiscal measures to stimulate demand across various sectors of economy and announced various packages, the results of these are yet to show.

The country's manufacturing growth declined to 0.2 per cent, according to data released by the Central Statistical Organization (CSO) on Friday. Growth rate of the agriculture sector declined to just 2.2 per cent despite a massive loan waiver and other farm-friendly policies by the centre.

India's Chief Statistician Pronab Sen said, ''What has come as a surprise is agriculture… but we can be optimistic that the figures will improve.'' He said that country is unlikely to register GDP growth rate of 7.1 per cent for the financial year 2008-09 as projected by prime minister's economic advisory council and other leading financial institutions.

However, the government is optimistic about an improvement in the growth rate due to the various steps it has taken to boost demand. Minister of state for finance P K Bansal said, ''We had maintained seven per cent with a downward bias. That much has been said, but there is still a quarter to go. Even with 5.3 per cent, it still comes around seven per cent, maybe a shade below that.''

But analysts say even this is a pipe dream. They point out that for the 7.1 growth figure to be reached, the growth for the last quarter should have been at least 7.5 per cent, and not 5.3 per cent.

On the positive side, community, social and personal services posted a robust 17.3 per cent growth in the third quarter against 5.5 per cent in the same period a year ago. Financing, insurance, real estate and business services also grew by 9.5 per cent, against 11.9 per cent in the previous year.

Trade hotels, transport and communication, however, grew by a lower 6.8 per cent as compared to 11.6 per cent a year ago as tourist arrivals declined on account of the global crisis and the Mumbai terror attacks. With the sharp slowdown in realty, construction growth also fell to 6.7 per cent during the third quarter as against nine per cent a year ago.

Nonetheless, domestic demand has remained buoyant even in the slowdown. Private final consumption expenditure at current and constant prices stood at 10.7 per cent and 10 per cent respectively.