India's economic growth slows to 6.7% in 2008-09
The country’s gross domestic product (GDP) grew by 6.7 per cent in 2008-09, lower than the government’s earlier 7.1 per cent estimate but high enough to ensure that India remains among the fastest growing economies in the world.
Only China grew faster in 2008 — at 9 per cent. Rollercoaster ride of India's economy
Latest national income figures released on Friday showed that India’s GDP grew by 5.8 per cent in the quarter ending March 31, down from the 8.6 per cent in same quarter of last year.
But in a global economy that is imploding, the fact that India has been able to maintain growth over the past two tumultuous quarters came as a refreshing change.
The manufacturing sector — which accounts for over 14 per cent of GDP — contracted by 1.4 per cent in the quarter, mirroring the slide in exports.
Exports have contracted for six successive months as orders dried out because of a credit crisis in the US and Europe.
The data puts pressure on Prime Minister Manmohan Singh’s 78-member council of ministers, which was given a “perform or perish” ultimatum by Congress president Sonia Gandhi on Thursday.
For its part, the government exuded optimism amid expectations that more measures to spur growth will be announced next month during the full budget for 2009-10.
Commerce and industry minister Anand Sharma (56) said the effects of the global meltdown on the Indian economy were comparatively lesser. “In fact, there are signs, positive signs, of a revival of industry, including expansion that would be desirable for the manufacturing sector,” he said.
The new government assumes office staring at a series of challenges, with macroeconomic managers struggling for options that will allow them to spur the economy to faster growth — without inflating government borrowings — and increase jobs.
A growth of 7 p.c. over the next three years will leave 24.8 million people, or 5 p.c. of the total labour force, jobless. A 9 p. c growth rate would reduce the number to 13.5 million or 2.7 p.c. of the labour force, according to a National Commission for Enterprises in the Unorganised Sector report.
To achieve this, the government has taken a slew of measures, including sharp cuts in excise duties and increased plan spending, in the past few months. The flip side is that total government borrowings are set to cross 11 per cent of GDP.
But it is not all grim. The fact that GDP growth is still above 6 p.c. underlines the strength of the domestic economy. “We should be able to maintain the same GDP growth or even exceed it,” said Suresh Tendulkar, chairman, Prime Minister’s economic advisory council. “The government can now look at longer-term investment measures,” said Subir Gokarn, chief economist, Standard & Poor's Asia-Pacific.