India's economic growth rate this fiscal year is estimated to be a poor 5 per cent, the lowest in a decade, on account of a weak performance by the manufacturing, agriculture and services sectors, according to the Central Statistics Office (CSO). This comes on a day when Planning Commission Deputy Chairman Montek Singh Ahluwalia said the 8 per cent growth target for the 12th Plan (2012-17) stays.
In 2002-03, the GDP had grown at 4 per cent. Since then, the Indian economy has been expanding at over 6 per cent, the highest rate being 9.6 per cent in 2006-07.
The latest estimate of 5 per cent is the worst of all growth projections issued by the government and the Reserve Bank of India. Last month, the RBI had pared its GDP growth estimate for the fiscal year ending in March to 5.5 per cent, the worst since 2002-03.
The 5 per cent estimate for the entire fiscal year means that the pace of economic expansion has slowed sharply in the second half of 2012-13, given that GDP growth in the April-September period stood at 5.4 per cent.
"The numbers are disappointing," said C. Rangarajan, chairman of the Prime Minister's Economic Advisory Council. He added that the number may be revised upwards when more data for the second half of the financial year comes in.
"CSO's growth estimate is below what the Finance Ministry had expected," Finance Ministry officials said, adding that they are keeping a watch on the situation, and that the Ministry will continue appropriate measures to revive growth.
India's agriculture output is expected to grow 1.8 per cent, while the manufacturing sector is seen growing at an estimated 1.9 per cent in the current fiscal year that ends on March 31, 2012, the CSO said.
India's economy grew at 6.2 per cent in the last fiscal year, revised data from the government showed.
"Five per cent GDP growth for the full year is more in tune with reality. The industrial sector downturn has extended beyond anyone's expectation. In the first eight months of the year, for almost six months the manufacturing output has been negative. Exports have been continuously declining, non-food credit growth is slowing while agricultural sector performance has also been sub-optimal," said Rupa Rege Nitsure, chief economist, Bank of Baroda. (Read 'Estimates likely to be revised upward, say experts')
"After the government started showing a firm resolve to put things in place in mid-September, the series of data that has been released is also reflecting sustained deterioration across various growth indicators," she added.
Chief Statistician T.C.A. Anant told NDTV that the CSO's estimates are based on data until December and that the estimates are not a future projection of economic trends.
CSO's advance estimate lowered the growth in agriculture and allied activities to 1.8 per cent in 2012-13, compared to 3.6 per cent 2011-12. Mr Anant said there was likely to be some revisions in the agricultural growth numbers.
Manufacturing growth is also expected to drop to 1.9 per cent in this fiscal year from 2.7 per cent last year.
According to the advance estimates, the services sector, including finance, insurance, real estate and business services sectors, is likely to grow by 8.6 per cent this fiscal year against 11.7 per cent in the last fiscal year.
However, growth in the mining and quarrying is likely to be slightly better at 0.4 per cent, compared to contraction of growth of 0.6 per cent a year ago.
The construction sector is also likely to grow by 5.9 per cent in 2012-13 against 5.6 per cent last year.
According to the CSO's advance estimates, growth in electricity, gas and water production is likely to decline to 4.9 per cent in 2012-13, from 6.5 per cent in 2011-12.
During the current fiscal year, the trade, hotel, transport and communication sectors are projected to grow by 5.2 per cent, as against 7 per cent last fiscal.
Overall, the 5 per cent growth in the advanced estimates is lower than what experts have been forecasting.
Yesterday, the International Monetary Fund (IMF) said that the Indian economy would grow by 5.4 per cent in 2012-13, but should pick up to 6 per cent in the next fiscal year.
The Indian economy expanded by 8.4 per cent in both 2010-11 and 2009-10, while growth in 2008-09 was 6.7 per cent.
The advance GDP estimates are released by the CSO before the end of a financial year to enable the government to formulate various estimates for inclusion in the Union Budget, which will be tabled in Parliament on February 28 this year.
With inputs from Reuters and PTI