India's gross domestic product (GDP) grew by 4.5% by the during the October to December quarter in 2012 as the economy appeared on track to record its worst growth in a decade — factories are producing less, exports are shrinking and companies offering fewer jobs.
The GDP had expanded by 6% in the same period of last fiscal. The economic growth in the first nine months of this fiscal (April-December) stood at 5 %, lower than 6.6% in the year-ago period.
Farm sector output expanded by just 1.1 % in the October-December period this fiscal, against 4.1% in the same quarter last fiscal.
"The overall growth rate is expected to be in the range of 6.1-6.7% in 2013-14. Of course, these projections assume that monsoon is normal, the rate of inflation declines further and the anticipated mild recovery of global growth rate takes place," the government's medium term fiscal policy statement placed along with budget.
"In the current year, the Central Statistical Organisation has estimated growth at 5% while the RBI has estimated growth at 5.5%. Whatever may be the final estimate, it will be below India's potential growth rate of 8%. Getting back to that growth rate is the challenge that faces the country," finance minister P Chidambaram said.
The alarmingly slow growth, worst since the drought year of 2002-03, will also imply that India will no longer remain the world's second fastest growing major economy behind China.
China's economy grew 7.9% in 2012 while estimates put Indonesia's growth at over 6% last year.
"Even now, of the large countries of the world, only China and Indonesia are growing faster than India in 2012-13,” Chidambaram said.