Industry, Manufacturing, Mining Down as India Records 6.1% GDP Growth Rate

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--The Indian government has reported that the country's economy expanded at the weakest pace in more than two years in the third quarter (October-December 2011) of the current fiscal year, as sticky inflation, aggressive monetary tightening by the Reserve Bank of India (RBI), policy stalemates, and a global slowdown crimped investment and consumer spending.

The country's GDP grew 6.1% in the third quarter against the same quarter in the previous fiscal year. Government said the economy expanded 6.9% in the second quarter from the same period in 2010, having stood at 7.7% in the first quarter. Economists had forecast a GDP growth in the range 6.2% to 6.4% for the second quarter.

The growth rate is the lowest in 10 quarters, and it is the fourth straight quarter where it is below 8%. The Indian economy grew 8.3% in the third quarter of fiscal year 2010-11, and expanded 8.5% for that fiscal year.

India's GDP growth in the first nine months of the current fiscal year stood at 6.9% year-over-year, versus 8.1% growth year-over-year for the corresponding period of the last fiscal year, the central statistical office stated.

Sectoral data for the third quarter showed industry growing 2.6% vs. 7.6% year-over-year; manufacturing 0.4% vs. 7.8% year-over-year; mining-contracting 3.1% vs. 6.1% year-over-year; construction 7.2% vs. 8.2% year-over-year; and agriculture 2.7% vs. 11% year-over-year.

Gross fixed capital formation, an important indicator of investment in the economy, is estimated to have shrunk by 1.2% year-over-year in the third quarter compared to an increase of 11% in the third quarter of the previous year.

Unless the government makes bold moves to stimulate the economy, observers see no change in the current trend for 2012.

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