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GDP up 7.8% , Manufacturing Sector registers 5.5% growth in Q4 FY11 Print E-mail
Written by Anand   
Wednesday, 01 June 2011
New Delhi: India's economy grew by 7.8 per cent in the fourth quarter ended March 2011 compared to 9.4 per cent in Q4 2010. This is mainly due to poor performance of the manufacturing sector. During the quarter ended March 31, 2011, manufacturing sector growth slowed down to 5.5 per cent from 15.2 per cent in the same quarter of 2009-10.

The IIP of manufacturing registered a growth rate of 8.1 per cent during 2010-11, as against the growth rate of 10 per cent during April-November, 2010.

Due to this decrease in the IIP, the growth rate in GDP of 'manufacturing' sector is now estimated at 8.3 per cent, as against the Advance estimate growth rate of 8.8 per cent.

Growth rates in various sectors are as follows: 'agriculture, forestry and fishing' (6.6 per cent), 'mining and quarrying' (5.8 per cent), 'manufacturing' (8.3 per cent), 'electricity, gas and water supply' (5.7 per cent) 'construction' (8.1 per cent), 'trade, hotels, transport and communication' (10.3 per cent), 'financing, insurance, real estate and business services' (9.9 per cent), and 'community, social and personal services' (7.0 per cent).

CII said that the slowdown in GDP growth in the last quarter of the financial year 2010-11 is on expected lines. "The slowdown in capital formation and decelerating industrial growth are the key concerns that emerge from the data released today," said Mr. B Muthuraman, President CII. This is in line with the concerns already expressed by CII already. CII had earlier highlighted that a sharp rise in raw material costs and interest rates have started to impact industry negatively and is likely to lead to a slowdown in investments. The Business Confidence Index recently released by CII has also shown a decline of 4.2 points due to deterioration in respondents' expectations for the period April-June 2011.

According to CII, there is a need to remove some of the bottlenecks that have stalled industrial growth in the fourth quarter. CII has recommended that 100 mega-projects of national significance be identified and fast-tracked in order to overcome the sluggishness in the investment environment. Reforms also need to be pursued in the areas of land and labour so that large-scale manufacturing projects can be implemented. Improvements in transport infrastructure and availability of power at reasonable rates are critical for ensuring competitiveness of Indian products. Finally, moving forward on tax reforms such as GST would go a long way in improving business sentiment.

"While the GDP clocked a growth rate of 8.5 percent for the year 2010-11, the disaggregated figures reveal that the growth of industrial sector has slowed down across the board. The persistent tightening of monetary policy is surely leaving an imprint on the performance of industry" said Dr. Rajiv Kumar, Secretary General, FICCI.

Mining & quarrying, manufacturing, electricity, gas & water supply all showed lower growth rates of 5.8, 8.3 and 5.7 percent respectively in 2010-11 against the growth rate of 6.9, 8.8 and 6.4 percent in 2009-10. “The trend of industrial slowdown which is particularly evident in the Q4 figures for 2010-11 is a worrying trend", said Dr Kumar.

The buoyancy in agriculture sector has pushed up the growth rate. This sector witnessed a growth of 6.6 percent in 2010-11 compared to previous year's 0.4 percent. The overall services sector growth has also slowed down from 10.1 percent in 2009-10 to 9.4 percent in 2010-11 mainly because of the decline in component 'community, social & personal services'. 

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