India's GDP growth languishes, headed for decade low

Fri Nov 30, 2012 5:30am EST
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Frank Jack Daniel

NEW DELHI (Reuters) - India's economy extended its long slump in the last quarter, with lower-than-expected growth keeping it on track for its worst year in a decade and underscoring the urgency of politically difficult reforms to spur a revival.

The economy grew 5.3 percent from a year earlier in the July-September period, provisional gross domestic product (GDP) data showed on Friday, below the 5.5 percent posted for the three months ending in June.

"It is essential that the reform agenda is carried forward with vigor and that the recently announced measures are implemented," leading business chamber FICCI said.

Prime Minister Manmohan Singh's chief economic advisor forecast full-year growth of between 5.5 and 6 percent, which would be the slowest since 2002/3.

"It will be between the two, because in order to get 6 percent we really need very strong growth in the second half," advisor C. Rangarajan told TV network CNBC.

A growth rate below 6 percent for the third quarter in a row is damaging for a country that aspires to at least 8.5 percent expansion to provide jobs for its burgeoning population, and makes it tougher for Singh to fund flagship welfare programs.

The quarterly number was lower than a Reuters poll had forecast and matched the January-March quarter, which was the weakest growth rate in three years. However, economists say inflation worries mean the Reserve Bank of India (RBI) is unlikely to cut interest rates when it meets on December 18.

Facing the prospect of the downturn stretching into a general election due in 2014, Singh launched some of the most daring initiatives of his eight-year tenure in September, including raising subsidized diesel prices and opening the airline and retail sectors to foreign players.   Continued...

 
A worker welds iron rods at the construction site of a commercial complex in the western Indian city of Ahmedabad November 29, 2012. India's economy extended its long slump in the last quarter, with lower-than-expected growth keeping it on track for its worst year in a decade and underscoring the urgency of politically difficult reforms to spur a revival. Picture taken November 29, 2012. REUTERS/Amit Dave