BAD NEWS! Growth dips to 5.3%, lowest in 9 years

India's economic growth rate slipped to 5.3 per cent in the fourth quarter of 2011-12, lowest in nearly 9 years due to poor performance of the manufacturing and farm sectors.

The gross domestic product growth in the January-March quarter of 2010-11 was 9.2 per cent, according to the government data released on Thursday.

GDP in 2011-12 also moderated to 6.5 per cent from 8.4 per cent in the 2010-11.

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During the quarter ending March 31, growth in the manufacturing sector contracted to 0.3 per cent, from 7.3 per cent in the corresponding period of 2010-11.

Farm output also exhibited a similar trend and expanded by just 1.7 per cent during the quarter, compared to 7.5 per cent in the Q4, 2010-11.

However, mining and quarrying production growth stood at 4.3 cent during the quarter under review, as against a growth of meagre 0.6 per cent in Q4 of in 2010-11.

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Growth in the construction sector slowed to 4.8 per cent during the January-March quarter of 2011-12, from 8.9 per cent in the year-ago period.

The trade, hotels, transport and communications segment grew by 7 per cent during in the quarter under review, as against 11.6 per cent expansion in the year-ago period.

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However, electricity, gas and water supply grew by 4.9 per cent in the January-March period, compared to 5.1 per cent growth in the corresponding period last fiscal.

The growth of the services sector, including insurance and real estate remained unchanged at 10 per cent in the fourth quarter ended March.

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Manufacturing growth in 2011-12 slowed to 2.5 per cent, compared to 7.6 per cent in the previous fiscal.

Besides, output of mining and quarrying sector declined by 0.9 per cent last fiscal, as against the positive growth of 5 per cent in 2010-11.

Further, the agriculture, forestry and fishing sector grew by just 2.8 per cent last fiscal, as against 7 per cent expansion in 2010-11.

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Growth of the construction sector stood at 5.3 per cent last fiscal, compared to 8 per cent in 2010-11.    

The only silver lining is the growth in electricity, gas and water supply segment where output rose by 7.9 per cent in the last fiscal compared to 3 per cent in 2010-11.

Persistent sluggishness in the economy due to slowdown in the manufacturing sector, coupled with decline in mining and quarrying, is likely to put pressure on the Reserve Bank to cut interest rates in its policy review in June.