NEW DELHI: India’s economy grew by a sluggish 4.7 percent in the last quarter of 2013, data showed yesterday, marking more bad news for the ruling Congress party ahead of looming elections.
The 4.7 percent year-on-year expansion in the three months to December undershot market forecasts of around five percent growth and reflected high interest rates that have crimped investment and consumer spending. No immediate improvement was seen on the horizon for growth in the gross domestic product (GDP) of Asia’s third-largest economy.
“We continue to expect India’s economic recovery to remain slow and uneven. Local conditions remain challenging, which is critical as the economy is driven primarily by domestic demand,” said Capital Economics economist Miguel Chanco.
The figures reported by India’s ministry of statistics was the fifth straight quarter of below five-percent expansion. Growth has crumbled from nearly double-digit expansion just two years ago, a level economists say India must reach again to generate jobs for its vast young population.
Although down from November, stubbornly high consumer price inflation continues to constrain household spending power, economists said. What’s more, economists say, a huge backlog of projects stalled by India’s infamous bureaucratic red tape will keep weighing on investment.
Meanwhile, recent tightening of both monetary and fiscal policy to curb inflation is placing added downward pressure on the economy. Overall, economic growth “is likely to remain muted,” said Chanco.
The third-quarter performance was slightly weaker than the previous three months when the economy grew by 4.8 percent.
Earlier this month, the government forecast the economy would grow by 4.9 percent in this fiscal year to March, after expanding by a decade low of 4.5 percent last year. However, most private economists see expansion in the low four percent range.
“There is no sign of a lift in the real economy,” senior Moody’s Analytics economist Doug Levine said. Economists say the economy grew 4.6 percent in the first half and needs to expand 5.2 percent in the second half to meet the government’s full-year 4.9 percent growth target. AFP
