"GDP growth rate in India during 2013-14 is estimated at 4.9 per cent as compared to the growth rate of 4.5 per cent in 2012-13," according to advanced estimates released today by the Central Statistics Office (CSO).
Part of the improvement can be attributed to statistical reasons as the CSO had earlier lowered growth for 2012-13 fiscal to 4.5 per cent in its revised estimates from an earlier provisional forecast of 5 per cent.
While the Chairman of the Prime Minister's Economic Advisory Council C Rangarajan described it as "encouraging news...indicating that (economic) slowdown has bottomed out,"the India Inc said the growth was below potential and the government would need to take steps to boost manufacturing which showed a contraction of 0.2 per cent.
"The GDP estimates (are) still below potential...What is worrisome is the poor performance estimated in the mining and manufacturing sectors which are in the red. The growth rate would have been lower had it not been for the favourable base effect of last year," CII Director General Chandrajit Banerjee said while commenting on advance GDP estimates of the CSO.
However, as per the CSO estimates, India is poised to become a USD 1.7 trillion economy and per capita income will soar by 10.4 per cent to Rs 74,920 in 2013-14.
For 2013-14, the CSO has projected a growth rate of 4.6 per cent in agriculture and allied sectors, up from 1.4 per cent a year earlier.
Manufacturing, however, is expected to register a contraction of 0.2 per cent in this financial year compared with growth of 1.1 per cent in the previous year.
Mining and quarrying is likely to contract 1.9 per cent, compared with a 2.2 per cent decline in production a year ago.
The latest estimate of 4.9 per cent for 2013-14 implies that the pace of economic expansion improved in the second half, given that GDP grew 4.6 per cent in the April-September period.
"To achieve higher growth going forward, the principles of sound governance, clear policies and effective implementation should be adhered to. Also, there is a need to shift to time-bound decisions over time-bound actions " said FICCI President Sidharth Birla while commenting on CSO estimates.
CRISIL's Chief Economist D K Joshi said, "Manufacturing and mining sectors are in bad shape which is worrying for development."
According to the advance estimates, the services sector, including finance, insurance, real estate and business services sectors, is likely to grow 11.2 per cent this year compared with 10.9 per cent in 2012-13.
Growth in construction is likely to improve to 1.7 per cent from 1.1 per cent in 2012-13.
According to the CSO's advance estimates, growth in electricity, gas and water production is likely to improve to 6 per cent in 2013-14 from 2.3 per cent in 2012-13.
The trade, hotel, transport and communication sectors are projected to grow by 3.5 per cent, as against 5.1 per cent in the previous financial year.
Community social and personal services growth would be better at 7.4 per cent, compared with 5.3 per cent previously.
The CSO releases advance GDP estimates before the end of the financial year to enable the government to formulate various estimates for inclusion in the Budget.
Per capita income in real terms (at 2004-05 prices) during 2013-14 is likely to attain a level of Rs 39,961 as compared to the first revised estimate for the year 2012-13 of Rs 38,856.
The growth rate in per capita income is estimated at 2.8 per cent as against the previous year's estimate of 2.1 per cent, the CSO said.
Per capita income at current prices during 2013-14 is estimated to be at Rs 74,920 compared to Rs 67,839 during 2012-13, a rise of 10.4 per cent.
Gross Fixed Capital Formation (GFCF), an indicator of investment, is forecast at Rs 32.2 lakh crore at current prices as against Rs 30.7 lakh crore in 2012-13 fiscal.
At constant (2004-05) prices, GFCF is estimated at Rs 20.1 lakh crore in 2013-14 as against Rs 20.0 lakh crore.
In terms of GDP at market prices, the rates of GFCF at current and constant (2004-05) prices during 2013-14 are estimated at 28.5 per cent and 32.5 per cent, respectively.
The corresponding rates were 30.4 per cent and 33.9 per cent, respectively in 2012-13 fiscal.
The rate of expenditure on valuables at current prices has gone down from 2.6 per cent in 2012-13 to 2.1 per cent in 2013-14, the statement added.
* India's economic growth seen at 4.9 pct in 2012/13 vs 4.5 pct a year ago
* Manufacturing seen contracting 0.2 pct v/s 1.1 pct growth
* Services seen growing at 6.9 pct v/s 7.0 pct
* Chidambaram likely to announce measures to boost manufacturing
India cuts growth forecast to less than 5 pct before elections
(Reuters) - India on Friday cut its estimate of annual growth for the fiscal year to 4.9 percent from 5 percent because of a contraction in the manufacturing and mining sectors.
The revision down will do little to help the Congress party-led ruling alliance, which faces an uphill battle in a general election due by May amid allegations of economic mismanagement, corruption scams and high inflation.
Last week, the Statistics Ministry revised down economic growth for the previous fiscal year to 4.5 percent - the slowest pace during the decade Manmohan Singh has been prime minister - from an earlier estimate of 5 percent.
Farm output is expected to grow 4.6 percent in the fiscal year to March 31, against 1.4 percent growth a year ago, while the manufacturing sector is seen contracting by 0.2 percent compared with 1.1 percent growth in 2012/13, the Statistics Ministry said in a statement.
Last year, Finance Minister P. Chidambaram had projected gross domestic product (GDP) growth of 6.1-6.7 percent in 2013/14 in his annual budget, but lately lowered the estimates to about 5 percent.
Chidambaram is widely expected to announce measures, including a cut in factory gate duties on some products, to push up manufacturing output when he presents an interim budget for the coming fiscal year in parliament on Feb. 17.
The full-year budget will, however, be presented by the next finance minister after the elections.
Asia's third-largest economy grew at 4.6 percent annually in the first half of the current fiscal year, down from 5.3 percent in the corresponding period a year ago.
The services sector, which contributes about 60 percent to gross domestic product, is likely to grow at 6.9 percent in the current fiscal year, compared with 7 percent growth a year ago, the data showed.
The construction sector, contributing nearly 8 percent to GDP, is estimated to grow at 1.7 percent from 1.1 percent a year ago.
"The data shows that there is an overall slowdown in the economy with construction being very weak together with manufacturing," said Saugata Bhattacharya, chief economist at Axis Bank.
"Going ahead, we expect GDP growth to definitely pick up to around 5.2-5.3 percent depending on the policies of the next government," he said.
Increases in interest rates by the Reserve Bank of India to rein in near-double digit retail inflation - three times since Raghuram Rajan took charge in September - have also dampened chances of early economic recovery.
"Notwithstanding a favourable monsoon in 2013 and healthy agricultural performance, the pickup in rural demand has been uneven and weaker than expected," said Aditi Nayar, an economist at ICRA, the Indian arm of rating agency Moody's.
The economy grew at more than 9 percent annually for three straight years during the 2005/06 to 2007/08 period, before being hit by the global financial crisis and high interest rates amid a slower global recovery.
This year, the government has cleared hundreds of much-delayed projects such as power plants, mines and ports, but the impact is expected to be visible only in next year's growth numbers, due to a time lag in actual investments.
Last week, the Reserve Bank of India in its quarterly review said the weakening of private consumption and investment demand had dampened prospects of a second-half pick-up in GDP growth.
Consumption, which contributes about 70 percent to the near $1.8-trillion economy, is expected to grow 4.4 percent in fiscal 2013/14, down from 5.2 percent the previous year, the data showed.
Indian makers of durable goods such as washing machines, refrigerators and electronic items face a bad year, as output of these goods contracted 12.6 percent during the period from April to November.
Annual car sales declined by about 5 percent in the first three quarters, hit by high inflation, fuel prices and interest rates.