Economic growth slumps to 4-year low; Manmohan says he is still hopeful
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Economic growth slumped to its slowest in four years, clocking just 4.4 per cent in the April-June quarter compared with 4.8 per cent in the January-March quarter, dashing hopes that the GDP growth slowdown had bottomed out.
The new fall was precipitated by a sharp contraction in growth in both manufacturing and mining. It comes at a time when the stock market has dropped more than 10 per cent in the past three months and the rupee has lost a sixth of its value against the dollar this year, much of it in the past month.
Speaking before the data was released on Friday, Prime Minister Manmohan Singh asserted that he was still hopeful the country would grow at 5.5 per cent in 2013-14, rejecting projections that growth may slide below 4 per cent this year.
"We have the will power to pull back the economy to 8 per cent growth rate," he said in Parliament. Singh's projection is sharply lower than the budget estimate of 6.1 per cent to 6.7 per cent GDP growth announced just six months back.
But all the worrying signs of the cascading impact of the slowdown were evident in the latest set of numbers released by the Central Statistics Office (CSO). These include a decline in passengers kilometres recorded by the railways, down 3.4 per cent in the April-June quarter, which points to signs of consumers cutting back on optional expenditure on travel.
The slowdown in the core sectors seems to have spread to the services sector as well, which had continued to hold up so far. Within the services sectors, only the 'community, social and personal services' - essentially representing government expenditure - grew faster in the first quarter at 9.4 per cent compared with 8.9 per cent during the same quarter a year ago.