India jolted by weak growth data

India's economy grew just 5.3 percent in January-March, its slowest pace in almost a decade, data showed Thursday, as a global slowdown, high interest rates and political deadlock take their toll.

The figure, which sharply undershot analysts' projections of 6.1 percent, pushed India's currency to a record low and piles pressure on the embattled government of Prime Minister Manmahan Singh.

"The economy is in the throes of a serious slowdown," said Chandrajit Banerjee, director general of the Confederation of Indian Industry, calling for rate cuts and other "bold" actions "exclusively aimed at salvaging the economy."

The figure for the final three months of the fiscal year was the slowest since 2002-2003 and added to the gloom already surrounding Asia's third-largest economy, where a string of corruption scandals and a lack of economic reforms have hit business sentiment.

The grim data also came on a day the country was hit by a sweeping nationwide strike over rising petrol prices that shut offices and disrupted public transport in many cities.

"Confidence and demand have been weighed down by higher interest rates, a challenging export environment, and, perhaps most important, policy mismanagement," Glenn Levine, senior economist at Moody's Analytics.

The figures from the national statistics office showed the economy expanded 6.5 percent for year to March 2012, far below the 8.4 percent logged the previous year and the lowest since the economy expanded by just four percent in 2002-03.

Singh admitted last week his scandal-tainted Congress-led coalition must "do better" to get the once red-hot economy back to the growth rates of nine percent seen in the past decade.

But administration, which has ballooning fiscal and current account deficits, has little room to increase spending to spur growth while interest rates cannot be cut significantly because of high inflation of around 7.0 percent.

Cutting rates would also put further downward pressure on the rupee, which on Thursday sank to 56.50 against the dollar, its lowest ever.

"With growth slowing, inflation sticky and interest rates still high, it is a difficult situation for the central bank -- whether to be pro-growth or battle inflation," said Naveen Mathur, an associate director at Angel Broking.

"And besides this there are serious global concerns."

The final quarter of the last financial year saw a contraction in the key manufacturing sector, with output shrinking 0.3 percent, compared with 7.3 percent expansion in the same quarter last year.

Farm, construction and mining production grew only modestly.

Shares on the Mumbai stock market fell as much as 1.38 percent after the figures were released.

"We are going through a rough patch worldwide. Growth figures have taken a hit because of that," Rajesh Chakrabarti, professor of finance at the Indian School of Business, told India's NDTV network.

While more than six percent full-year growth would be the envy of much of the world, at least nine to 10 percent expansion is needed to reduce India's widespread poverty, experts say.

The sluggish results will add to concerns about the global outlook as China has also recently released a slew of bleak data, fuelling fears the world's second biggest economy is cooling faster than expected.

Hopes the two emerging market giants, who weathered the 2008 financial crisis well, could underpin another global recovery have been steadily dashed by their stuttering performances.

Singh is credited with opening up the economy when he was the finance minister in 1991 but his premiership has been undermined by a series of policy U-turns and corruption scandals.

His once ambitious reform agenda has stalled amid coalition infighting, and the economic climate has been further strained by the announcement of new tax measures seen as hostile to foreign investment.


Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • N. Korea fires missiles in anger at South-US military drills
    N. Korea fires missiles in anger at South-US military drills

    North Korea fired two short-range ballistic missiles into the sea and vowed "merciless" retaliation Monday as the US and South Korea kicked off joint military drills denounced by Pyongyang as recklessly confrontational. The annual exercises always trigger a surge in military tensions and warlike rhetoric on the divided peninsula, and analysts saw the North's missile tests as a prelude to a concerted campaign of sabre-rattling. "If there is a particularly sharp escalation, we could see the …

  • Couple married 67 years holds hands in final hours together
    Couple married 67 years holds hands in final hours together

    FRESNO, Calif. (AP) — After spending 67 years together as devoted husband and wife, there was no question how Floyd and Violet Hartwig would end their lives — together. …

  • Hijacked Indonesian vessel found in Davao
    Hijacked Indonesian vessel found in Davao

    An Indonesian cargo vessel that was hijacked a month ago in North Sulawesi, Indonesia has been found stuck in the waters off Mati, Davao Oriental, the Philippine Coast Guard (PCG) reported yesterday. PCG spokesperson Armand Balilo said the PCG- Southeastern Mindanao district was informed on Feb. 23 that the M/T Rehoboth was found aground off Barangay Cabuaya. Four personnel from the local PCG district office were sent to verify the report. The vessel was reportedly hijacked by …

  • 'Jihadi John' relatives under watch in Kuwait
    'Jihadi John' relatives under watch in Kuwait

    Kuwaiti authorities are closely monitoring several relatives of "Jihadi John" who live and work in the Gulf emirate where the Islamic State executioner was born, press reports said on Sunday. A number of relatives of Mohammed Emwazi, named as the militant who has beheaded at least five Western hostages, are working in Kuwait and like him hold British citizenship, Al-Qabas newspaper reported. "Security agencies have taken the necessary measures to monitor them round the clock," the paper said, …

  • Military steps up offensive vs BIFF, Abu Sayyaf
    Military steps up offensive vs BIFF, Abu Sayyaf

    Armed Forces of the Philippines (AFP) chief Gen. Gregorio Pio Catapang Jr. has ordered the sustained campaign against the Abu Sayyaf and the Bangsamoro Islamic Freedom Fighters (BIFF) following the successive offensives against the armed groups last week. A total of 24 Abu Sayyaf bandits and two soldiers were killed in recent clashes in Sulu last week. The Joint Task Group Sulu has received information that Abu Sayyaf leader Radulan Sahiron was wounded during one of the encounters but this is …

  • Militants want US Marines pulled out of Negros
    Militants want US Marines pulled out of Negros

    The militant group Bagong Alyansang Makabayan (Bayan) is calling for the pullout of US Marines who arrived in Sagay City, Negros Occidental last Wednesday to train Special Action Force (SAF) commandos and members of the allied forces. The SAF commandos and the allied forces will secure the Asia-Pacific Economic Cooperation (APEC) ministerial meeting in this city. Bayan-Negros secretary general Christian Tuayon said the US troops might violate the human rights of activists, especially those …

  • Interview: Australia says hunt for missing MH370 jet may be called off soon
    Interview: Australia says hunt for missing MH370 jet may be called off soon

    By Matt Siegel CANBERRA (Reuters) - The search for missing Malaysia Airlines Flight MH370 cannot go on forever, Australia's deputy prime minister said, and discussions are already under way between Australia, China and Malaysia as to whether to call off the hunt within weeks. No trace has been found of the Boeing 777 aircraft, which disappeared a year ago this week carrying 239 passengers and crew, in what has become one of the greatest mysteries in aviation history. The search of a rugged …

  • Binay backs house arrest for JPE, GMA
    Binay backs house arrest for JPE, GMA

    Vice President Jejomar Binay yesterday supported proposals to put Sen. Juan Ponce Enrile and former President now Pampanga Rep. Gloria Macapagal- Arroyo under house arrest. “Government prosecutors are opposing house arrest for… Enrile. Binay issued the statement after the 91-year-old Enrile was rushed to the Makati Medical Center on Thursday due to pneumonia. House arrest for him would be the compassionate thing to do,” he added. …


Should Aquino be held accountable over the Mamasapano operations?

Poll Choice Options