New Delhi , August 30
Impacted by a weak investment climate and tepid policy making, India’s GDP growth rate for the April-June quarter came in at 7.7 per cent, the slowest growth in six quarters and the third straight quarter of decline. This is the lowest growth rate since the third quarter of 2009-10. There has been a downward revision in the GDP growth rate of the same period last year from the earlier 9.3 per cent to 8.8 per cent.

“This has pushed up the growth rate in Q1 of 2011-12 to 7.7%” said Rajiv Kumar, Secretary General, Federation of Indian Chambers of Commerce and Industry (FICCI). A FICCI analysis shows that growth in Q1 of 2011-12 would have been lower at 7.2% without this downward data revision of the corresponding quarter of the previous year.

Agriculture expanded 3.9 per cent during the first quarter compared to 2.4 per cent last year. Industry growth was weak at 5.1 per cent 10.5 per cent, against whereas the services sector grew at 10 per cent compared with 9.6 per cent.

Finance Minister Pranab Mukherjee said the GDP numbers were disappointing while chief economic advisor, Kaushik Basu expected better numbers in the second half of the current fiscal year.

The Confederation of Indian Industry (CII) said that the industrial sector has been particularly affected by structural problems such as delays in the implementation of large projects. Thisis reflected in the extremely poor growth of the mining and construction sectors.

Although CII expects GDP growth to recover in the second half, it has again asked the RBI to refrain from hiking interest rates in the forthcoming policy, taking note of the weakness in the economy.

Giving its prescription to buck the slowdown it has said that economic reforms need to be accelerated at the national level by taking forward the proposed policy changes such as goods and services tax, liberalisation of FDI in select sectors, and announcement of the new Manufacturing Policy.

FICCI estimates that the GDP growth in the current fiscal may be in the lower band of 7.5%-8.0% with some significant downside risks.