Indian GDP Disappointing

finance minister

Indian GDP figures are here. It is very disappointing for the nation. Indian GDP growth in the three months ended Dec 30, 2011 was just 6.1%. Prediction by experts was around 6.35%. It is below the market expectations. There were negative stock market reactions after the news.  Indian GDP growth was 6.9% in July- September quarter. It is expected that the GDP growth in the FY 2012 will be below 7%. Q3 numbers are very disappointed one for the economy.

Manufacturing is an important sector which determines GDP. The sector accounts 15% of the total GDP. It was grown by 0.4% and reached at 7.8%. The sector is stumbling under high material cost and high borrowing cost. Negative manufacturing growth was expected. A slightly positive growth was surprised by many analysts. Agriculture sector is also accounting 14% of the GDP. It was grown by 2.7%. Mining and quarrying sector is in trouble. The industry is affected by environmental issues and like that. It gave a negative growth of 3.1% against growth of 6.1% in the same period last year. Service sector gave good growth momentum. The areas like hotels, trade and transportation has been grown by 9.1%. It was 9.8% in the same period last year. Growth in financing, real estate was 9%. Construction sector was grown by 7.2% against a growth rate of 8.7% in the same period last year. Consumer spending was up by 6%. The traditional festive season helped the industry in last quarter.

It is expected that Reserve Bank will cut interest rates in April 2012 to boost growth. Food prices started to rise again. If the oil prices are up after UP election, it will be a challenge for the rate cutting activities. If inflation rises, RBI will be in pressure. There is good chance to slip the growth rate below 6%, if there are no positive steps in the budget. Indian borrowing cost is standing at the highest from 2008. Indian rupee has been appreciated near 9% in 2012. Indian rupee was depreciated 16% in the calendar year 2011. According to Credit Sussie Group SE, Reserve Bank will cut rates by 175 basis points by January 2013. Millions of Indian government employees struck Wednesday by the protesting against the central government. They protested against the increased cost of living and selling stake in the state run companies. According to trade unions, disinvestment steps will lead to job losses.

Union Budget 2012-13 Highlights

Union Budget 2012-13 Tax Slabs

One Response to Indian GDP Disappointing

  1. Jean Jecob says:

    It is a very beautiful one. What is expected in the budget.

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