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The economy grew at just 4.4 per cent in the first quarter of the current fiscal (2013-14), compared with 4.8 per cent during the preceding quarter (January-March) of the last fiscal, belying hopes of GDP growth having bottomed out.
The slowdown in the latest quarterly estimates — the weakest pace in four years — was precipitated by a sharp contraction in growth in both manufacturing and mining and comes at a time when the country’s stock market has dropped more than 10 per cent in the past three months and the rupee has lost a sixth of its value against the dollar this year, much of it in the past month.
Earlier, before the data was released late evening, Prime Minister Manmohan Singh asserted that he was still hopeful that the country would grow at 5.5 per cent in the fiscal 2013-14, rejecting projections that growth may slide below 4 per cent this year. “We have the willpower to pull back the economy to 8 per cent growth rate,” he declared in an intervention in Parliament. Singh’s projection for the current year is sharply lower than the budget estimate of 6.1 per cent to 6.7 per cent announced just six months back.
But all the worrying signs of the cascading impact of the slowdown were evident in the latest set of numbers released by the Central Statistics Office (CSO) today. These include a decline in passengers kilometers recorded by the railways, down 3.4 per cent in the April to June quarter of 2013-14, which points to signs of consumers cutting back on optional expenditure on travel. The slowdown in the core sectors seem to be spread to the services sector as well, which had continued to hold up so far. Within the services sectors, only the ‘community, social and personal services’ - essentially representing government expenditure - grew faster in the first quarter at 9.4 per cent compared with 8.9 per cent during the same quarter a year ago.
While the “trade and the hotel” sector grew at 3.9 per cent, the “financing, insurance and business services” grew at 8.9 per cent during the first quarter, both lower than the rate of growth in the corresponding period a year ago.
This is the second straight quarter when the economy grew below 5 per cent after posting a 4.8 per cent growth in the January to March quarter of 2012-13. In comparison, it grew at a