Narendra Modi may just have got it right when he said on Thursday that while the NDA had demitted office with an 8.4% GDP growth, the UPA had converted it into a 4.8% growth.
With GDP growing at 4.65% in the first nine months of the fiscal ? it grew at 4.7% in Q3 FY14 ? to get to the 4.9% projected in the advance estimates for the full year, the economy would need to grow at an unlikely 5.7% in the last quarter of the year.
While growth in consumption, which accounts for roughly 60% of GDP, declined in the quarter, growth in investment, the other major component of demand, turned negative yet again. Given that public consumption usually slows in the last quarter and would see a more severe squeeze this fiscal due to the budgeted tightening of the fisc, the picture looks all the more gloomy. While manufacturing contracted by 1.9%, the farm sector performed worse than expected in Q3.
The silver lining is a spurt in growth in the services sector to 12.5% from 10% in the previous quarter. Financial services grew at 12.5% in Q3 compared to 10% in Q2 and 8.9% in Q1, the result of the unexpected bonanza from FCNR deposits.
Though the Cabinet Committee on Investment has gone on overdrive in recent months, the projects are not going to come on line in time to boost growth in the fourth quarter. At sub-4.9%, FY14 will see the worst growth in the last decade.