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.

Loading...

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.

  • 15 wounded in attack on Philippine mosque
    15 wounded in attack on Philippine mosque

    Fifteen people including 10 police officers were wounded in an attack on a mosque on a remote Philippine island long plagued by Islamic militancy, officials said on Saturday. Successive blasts targeted a mosque on the island of Jolo -- an initial grenade attack followed by a bomb explosion that was intended to target police who rushed to the scene, local authorities said. "It seems the (first) explosion was set up to draw responders as the target," the provincial police chief Senior …

  • US missile cruiser docks at Subic
    US missile cruiser docks at Subic

    A US Navy missile cruiser has dropped anchor in Subic Bay as part of “routine port call,” amid rising tension in the West Philippine Sea stirred by China’s island building activities and other threatening moves by its forces. The arrival of the Ticonderoga-class missile cruiser USS Shiloh (CG-67) at the Subic Bay Freeport in Olongapo City yesterday was “just a routine port visit for ship replenishment and routine maintenance of shipboard system,” said Philippine Navy Public Affairs Office …

  • Agri, power sectors should brace for El Niño
    Agri, power sectors should brace for El Niño

    The agriculture and power sectors, as well as the general public should brace for a prolonged El Niño phenomenon that could further reduce water supply for electricity and irrigation, the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) warned yesterday. Flaviana Hilario, acting deputy administrator for research and development of PAGASA, said the El Niño condition is expected to intensify from weak to moderate by August this year. Anthony Lucero, …

  • China to US: Help cool down Phl on sea row
    China to US: Help cool down Phl on sea row

    The US should help “cool down” the Philippines and realize that its meddling in the West Philippine Sea (South China Sea) dispute would only stir tensions, a Chinese newspaper reported. “Washington should know its meddling in the South China Sea has been destabilizing the region. The US has vowed not to take sides in the territorial dispute, which involves China, the Philippines, Vietnam, Malaysia, Brunei and Taiwan. …

  • No stopping K to 12 despite SC case, protests
    No stopping K to 12 despite SC case, protests

    K to 12 is the fruit of years of comprehensive consultations involving different sectors in education,” Aquino said during the launching of the program at the Philippine International Convention Center (PICC) in Pasay City. Organized by the Department of Education (DepEd), the launch was attended by teachers, students and representatives from different stakeholders supportive of the K to 12 program. It was held two years after the signing of Republic Act 10533, or the Enhanced Basic Education …

  • MNLF pushes review of peace pact with gov’t
    MNLF pushes review of peace pact with gov’t

    The Moro National Liberation Front (MNLF) maintained its bid for completion of the tripartite review of the implementation of the peace agreement with the Philippine government in 1996. The MNLF’s desire to put consensual closure to the tripartite effort was relayed by its leaders to Sayed El-Masry, the special envoy of the Organization of Islamic Cooperation (OIC), during the annual foreign ministers conference in Kuwait last Thursday. The MNLF peace agreement with the government in Sept. 2, …

  • Noy to raise sea dispute issue with Abe
    Noy to raise sea dispute issue with Abe

    President Aquino is expected to raise the West Philippine Sea dispute during his meeting with Japanese Prime Minister Shinzo Abe in Japan next week. However, there is no word yet if the Philippines will specifically ask Tokyo to join calls for China to stop its massive reclamation activities in disputed waters. Aquino will leave for Tokyo on June 2 for a state visit until June 5. …

  • CHED releases wrong data on tuition hike
    CHED releases wrong data on tuition hike

    The Commission on Higher Education (CHED) appears to have released erroneous data on the allowed tuition and other fee increases in Metro Manila for the incoming academic year. On the list of the 51 approved higher education institutions (HEI) allowed to impose hikes, CHED pegged the average increase in tuition at P32.34 per unit and the average increase in other fees at P34.79. However, a Philippine STAR re-computation showed that the actual average approved tuition increases in Metro Manila …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options