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India GDP Growth Slows

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India's economic growth slows as rising prices hurt

India has reported weaker-than-expected growth numbers for the first three months of the year.

The country's economy grew by 7.8% in the first quarter compared with the same period last year, the latest government figures showed.

For the financial year to March, the economy grew by 8.5%, lower than the government's forecast of 8.6%.

India is one of the fastest-growing economies in the world, but has been hit hard by rising consumer prices.

Analysts say a surge in prices of essential commodities, coupled with measures to cool the economy, has started to take a toll on growth.

"Raging inflation and a gradual increase in borrowing costs has dampened domestic demand, alongside lacklustre investment sentiment," said Radhika Rao of Forecast Pte.

The central bank has increased interest rates nine times in 15 months.

The last rise on 3 May boosted the benchmark interest rate by 50 basis points to 7.25%.

"We have a situation where inflation is uncomfortably high, so the authorities are tackling it by raising interest rates," said Justin Wood of the Economist Corporate Network.

"Obviously this tightening environment has been slowing things down." he added.

Losing momentum
Continue reading the main story
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It is significant because it is the first quarter of sub-8% growth since the crisis”
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Sonal Verma

Nomura
India's economy has posted robust growth since the global financial crisis.

However, the Reserve Bank of India's monetary tightening policies have seen a loss of momentum.

Analysts say that as the central bank continues its fight against rising prices, the pace of growth is likely to be slow for some time.

"I think this loss of growth momentum will continue for industry for a quarter or two because we are not yet done with interest rate hikes," said Shubhada Rao of YES Bank.

However, analysts warned that though a slowdown in growth had been broadly expected, continued loss of momentum would have an adverse effect on the economy.

"It is significant because it is the first quarter of sub-8% growth since the crisis," said Sonal Verma of Nomura.

"The last four quarters we have been growing above 8%, so this is really a slow starting point for the next financial year," she added.

'Soft patch'

Rising food cost is of worry in a country where food makes up a huge chunk of the consumption basket The Indian government had set an economic growth target of 9% for this fiscal year.

However, in May Finance Minister Pranab Mukherjee admitted that India could miss that goal because of high inflation and rising commodity prices.

"When you look at India, it is perhaps going through a slight soft patch," said Mr Wood.

"Most countries would be delighted with the growth numbers India is recording, but it's lower than government growth targets."

Mr Wood added that while India's had grown robustly compared to developed economies, compared with China, it was lagging behind.

China's economy expanded 9.7% in the first three months of this year compared with the same period the year before.

"They would love to emulate China's growth, but we don't think they are there yet," said Mr Wood


BBC News - India's economic growth slows as rising prices hurt

HAhahaha to overtake china keep on missing growth target wont help
 
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u r comments do bring out u r lack of knowledge on indian economy i suggest u do a bit of reading and understand the concept of how rains can affect growth rate.

Lol if you are the finance minster of any country , with your comment on slow growth is due to the weather you not only making your self look like an assss and probally a resignation letter is on the card the following day.
 
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Lol if you are the finance minster of any country , with your comment on slow growth is due to the weather you not only making your self look like an assss and probally a resignation letter is on the card the following day.

personal attack on me wont save u. u r utter lack of knowledge on has come out in open in this thread.
 
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HAhahaha to overtake china keep on missing growth target wont help


We just want to grow fast, as fast as possible. If in doing so, we surpass a certain China, or any other xyz country, its just a milestone & nothing else. We dont want to "overtake" China.

Its not a 100m sprint, rather a marathon. And in a marathon, runner with initial lead doesnt always end up winning.
 
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8% is still a stable growth, should be able to continue it for atleast three decade's
 
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blaming the weather again for failure?

Do you know that 75% of Indian farmers depend on rains for irrigation ? And look at the numbers. The estimate was 8.6 % and we have a growth of 8.5%. In which angle does it look like we are blaming anyone for anything let alone failure. Read the article well and if you don't understand, ask.
 
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Lol if you are the finance minster of any country , with your comment on slow growth is due to the weather you not only making your self look like an assss and probally a resignation letter is on the card the following day.

Again, Ignorance is bliss. Read my previous post. About a quarter of GDP in India is dependent on agriculture and agri products.
 
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how india expected to over take china with that pathetic growth rate of 8% ??????

To economics Professor,
Q4 GDP growth is generally slower than other quarters.
Secondly RBI takes a very conservative view of the Economy as anything lower than expectations will hurt the credibility of the RBI.
We are likely to hit 8.5-8.7% this fiscal.
 
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Inflation is still a major worry in the economy and reforms in many sectors have been pending for too long. However, the target of $2 trillion GDP at current market prices and $1 trillion trade in goods and services seems truly achievable during this fiscal year 2011-12.:yahoo:
 
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Inflation is still a major worry in the economy and reforms in many sectors have been pending for too long. However, the target of $2 trillion GDP at current market prices and $1 trillion trade in goods and services seems truly achievable during this fiscal year 2011-12.:yahoo:

If GDP was $1 trillion in 2007, then to have $2 trillion in 2012 in an economy that grows at 8% is only possible in India where everyone cannot count.
 
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it's not that good. if pakistan was not in a war right now, it would have a higher growth rate than 8%.

Agree with the statement that Pakistan could have a higher growth rate had there been no civil war.And yes,India can do better.But then the GDP growth rate of this quarter is usually low.We expect it to go higher in the next quarter.

BTW,it will be difficult to beat countries like Azerbaijan when it comes to GDP growth rate.They have pitched it around 26%:blink:
 
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If GDP was $1 trillion in 2007, then to have $2 trillion in 2012 in an economy that grows at 8% is only possible in India where everyone cannot count.

I am quite sure you are familiar with the term inflation.GDP is expressed as inflation adjusted growth rate.They teach these things in schools.
 
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