Unhappy with 5.5. per cent GDP growth in April-June quarter, industry chambers today said opportunities for revival of the economy would soon "peter out" if the government does not take immediate policy action.
Expressing serious concern over the continuous slowdown in the GDP, which was the slowest pace of Q1 growth in a decade, industry body CII said the numbers leave no doubt about the "criticality" of the situation.
"CII strongly feels that opportunities for revival of economic growth would soon peter out if the economy dives into a downward growth spiral due to steep decline in growth of gross capital formation," chamber's Director General Chandrajit Banerjee said in statement.
Poor growth mainly in manufacturing, mining and agriculture pulled the first quarter GDP growth down from 8 per cent a year ago.
We once again appeal for a coordinated monetary and fiscal intervention to address this deteriorating situation, Banerjee said.
Industry body Assocham said the disaggregated figures clearly show the weaknesses in the economy and immediate corrective steps are required.
"The manufacturing sector has obviously been worst hit as the sector has become virtually stagnant at 0.2 per cent in Q1 of 2012-13 against 7.3 per cent growth in the corresponding period last year", Assocham President Rajkumar N Dhoot said.
Dhoot said given the global slowdown and slackening in exports demand, domestic manufacturing needs some stimulus by deeper cuts in interest rates.
"With the Finance Minister announcing intent on fiscal consolidation, this is an opportune time to cut repo rates," CII added.
Industry body FICCI said the growth slowdown reflects a sharp decline in investment and the government should take measures to control the fiscal deficit and lay basis for boosting investment demand.
"... what is worrisome is expectations of subdued global growth, uncertainty on Eurozone and slowdown in capital formation in India... I would like to emphasise that many needed economic decisions can be taken on administrative basis without new legislation," FICCI President R V Kanoria.
Consultancy firm Dun and Bradstreet expects the July-September (second quarter) GDP to remain subdued at below 6 per cent on inflationary pressures, unsatisfactory monsoon and policy stagnation.
"Nonetheless, we expect growth to witness some revival during the second half of the current fiscal with abatement of inflationary pressures and further easing of the monetary policy," said Dun and Bradstreet economist Arun Singh.