Growth for FY12 fell to its 9Yr low of 6.5% against 8.4% in FY11
GDP growth stood at 5.3% in Q4FY12 against expectations of 6.1%
GDP growth for Q4FY12 stood at 5.3% reflecting a declining trend over the past 4 consecutive quarters. For the full fiscal year FY12, growth stood at 6.5%, which was the lowest in past 9 years, including the period of global financial crisis (2008-09).
Growth in Q4 was primarily led by services sector which grew by 7.9%. Mining sector,which has been reporting contraction over the past three consecutive quarters,has shown a recovery by growing at 4.3% in Q4. Major decrease in GDP growth this quarter was reported by manufacturing sector which de-grew by 0.3%.
For the full fiscal year FY12, growth rate dropped to 6.5%. Services sector contributed the most towards this growth rate followed by Electricity and Construction. Services sector grew by 8.9% and constituted 59.0% ofIndia’s GDP in FY12. Comparatively, Manufacturing sector grew by 2.5% and constituted 15.3% of India’s GDP in FY12. Agriculture formed 14.0% of India’s GDP and has grown by 2.1% in FY12.
On expenditure side,government consumption expenditure increased from 30.3% to30.9% of GDP. Inspite of this increase in Govt. expenditure and lower than expected GDP numbers, GOI has reported a decline in fiscal deficit against the revised budget estimates. Fiscal deficit stood at 5.75% of GDP against the revised estimates of 5.9% in FY12.
The announcement of this GDP number was followed by the core sector growth data for Apr’12. Core sector growth remained flat at 2.2% in Apr’12 on MoM basis. This may have an adverse impact IIP growth ahead. Overall, the contraction in GDP and industrial production followed by the fragile global macroeconomic situation are hurting investor sentiments. Any rate cut measure in the upcoming monetary policy on 18th June may boost investor sentiments. However, inflation continues to be a major roadblock which may hinder RBI’s rate cut measures.
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