India’s economic growth slows to 6.1%

India’s economic growth rate slipped to 6.1 per cent in the third quarter this fiscal, lowest in more than 2 years due to poor performance of the manufacturing, mining and farm sectors. The Gross domestic product (GDP) growth in the third quarter (October-December) last fiscal was 8.3 per cent, as per the latest data released by the government on Wednesday. GDP in April-December period also moderated to 6.9 per cent from 8.1 per cent in the first nine months of 2010-11. During the quarter ending December 31, growth in the manufacturing sector dipped to a meagre 0.4 per cent from 7.8 per cent in the corresponding period of 2010-11. Farm output also exhibited a similar trend and expanded by just 2.7 per cent during the quarter, compared to 11 per cent in the corresponding period last fiscal. Mining and quarrying production contracted by 3.1 per cent during the quarter under review, as against a growth of 6.1 per cent in Q3 of last fiscal. Growth in the construction sector also slowed to 7.2 per cent during the quarter from 8.7 per cent in the same period a year ago. Furthermore, the trade, hotels, transport and communications segments grew by just 9.2 per cent in the quarter under review, as against 9.8 per cent expansion in the year-ago period. However, electricity, gas and water supply grew by robust 9 per cent in the October-December period, compared to 3.8 per cent growth in the corresponding period last fiscal. The growth of the services sector, including insurance and real estate, slowed to 9.9 per cent in the third quarter ended December, compared to 11.2 per cent expansion in Q3 of 2010-11. The Central Statistical Organisation has pegged the GDP growth for 2011-12 at 6.9 per cent, while the Prime Minister’s Economic Advisory Council (PMEAC) expects that it would be 7.1 per cent. The Indian economy expanded by 8.4 per cent in 2010-11. As per the data released on Wednesday, manufacturing growth in the 9-month period ending December, slowed to 3.4 per cent as compared to 7.6 per cent during the same period a year ago. During April-December, output of mining and quarrying sector declined by 1.4 per cent as against a positive growth of 6.7 per cent in same period last fiscal. Furthermore, the agriculture, forestry and fishing sector grew by just 3.2 per cent in the nine month period, as against 6.8 per cent expansion a year ago. Growth of the construction sector stood at 4.2 per cent during the 9-month period, compared to 7.7 per cent in the same period last fiscal. The slowdown in the manufacturing sector, coupled with decline in mining and quarrying, is likely to put pressure on the Reserve Bank of India to cut interest rate at its mid-quarter monetary policy review on March 15.