The Indian economy is now officially estimated to have grown at 5.3% in the October-December 2008 quarter over the corresponding months of 2007, making it the lowest year-on-year growth for any quarter since January-March 2003. The lower than expected growth in the third quarter (Q3) of 2008-09 makes it extremely unlikely that the 7.1% growth projected for the full financial year earlier this month will be met. It is likely to add to pressure on RBI to take measures to boost growth.
The sharp dip in growth in Q3, from 7.6% for Q2, was due to a 2.2% decline in agriculture and a 0.2% decline in manufacturing. The dip in agriculture would be particularly worrying for several sectors which were banking on strong rural demand. For April-December 2008, the growth rate is now 6.9%. The economy will have to grow 7.7% in Q4 if 7.1% growth for the full year is to materialise. Given the global recession, that seems extremely remote.
The sharp dip in growth in Q3, from 7.6% for Q2, was due to a 2.2% decline in agriculture and a 0.2% decline in manufacturing. The dip in agriculture would be particularly worrying for several sectors which were banking on strong rural demand. For April-December 2008, the growth rate is now 6.9%. The economy will have to grow 7.7% in Q4 if 7.1% growth for the full year is to materialise. Given the global recession, that seems extremely remote.
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