The economic slowdown is now visible in numbers.
India’s gross domestic product (GDP) clocked a 7.6 per cent growth in the second quarter of the current fiscal year compared with the same quarter of 2007/08, largely buoyed by a strong performance of construction and services, but low growth in agriculture and manufacturing was a matter of concern.
The growth rate in the July-September period was slower than the previous quarter’s 7.9 per cent, while the half-yearly growth stood at 7.8 per cent. The quarterly GDP growth was the lowest since the last quarter of 2004.
Finance Minister P Chidambaram described the growth rate as during the first half of 2008-09 as "healthy and satisfactory” in the worldwide context, where many economies are shrinking in a recession.
“The first half growth rate at 7.8 per cent is a satisfactory and a healthy growth rate with regard to the global slowdown,” he said, but admitted that the manufacturing sector was a problem area.
The government was also looking into the issues of certain sectors such as textiles, gems and jewellery, he added.
Policy-makers are grappling with options to boost exports amid shrinking order-books resulting from the worst financial meltdown in the world in 80 years.
The country’s exports are projected to decline by 15 per cent in October this fiscal, for the first time in any month in five years, and likely to miss the $200 billion target for 2008-09.
According to the Apparel Export Promotion Council (AEPC) exports of readymade garments from India tumbled by 6.6 per cent in September over the same month last year.
The US accounted for about 13 per cent of India’s exports totalling $158 billion in 2007/08.
Indian companies, beset by low volumes and high borrowing costs, have sought fiscal and monetary policy measures to boost demand in the economy.
“The manufacturing sector has slowed down and this sector needs to be pepped up. The other area that requires immediate attention is construction where the slippage in growth has been the steepest,” Federation of Indian Chambers of Commerce and Industry (Ficci) said in a statement.