In what could be a cause of worry for the Congress party in a year that will see assembly elections in several states, the Manmohan Singh government’s performance on the economic front has hit a low in its penultimate year in office, with the lowest growth recorded in a decade.

According to new data released by the Central Statistical Organisation (CSO) on May 31 (Friday), the growth was recorded at 4.8 per cent in the last quarter (January-March) of 2012-13. Worse, the aggregate growth touched 5 percent for the entire 2012-13 fiscal, making it the lowest growth point in a decade.
In the first, second and third quarters of 2012-13, India grew by 5.4 percent, 5.2 percent and 4.7 percent, respectively.

The bad news could not have come at a worse time for the coalition partners in the UPA as the government faces a general election latest by May next year.
Industry chamber Confederation of Indian Industry, however, said the growth story was “disappointing but expected”. “The Q4 gross domestic product (GDP) growth figures at 4.8 percent is disappointing but on expected lines”, said Chandrajit Banerjee, director general, CII.

According to the CSO, the economy grew poorly because performance slowed down in farm, manufacturing and mining sectors. On Tuesday, finance minister P Chidambaram had, while addressing a conference in Chennai, said, “Effective governance can push growth above 8 per cent.”

In the last quarter, the manufacturing sector grew marginally by 2.6 percent, while agriculture grew at 1.4 percent on a year-on-year basis. The mining sector, meanwhile, contracted an annual 3.1 percent.

“With no visible pick-up in any key levers of the economy, the situation remains grim. Demand in the system is weak with low levels of consumption, government expenditure and investments,” CII’s Banerjee said.

The CII also pointed out that policy logjam could be one of the reasons for low growth over the last two years. In a media release, the industry body said, “CII looks forward to some movement on issues such as assured coal linkages for the power sector, promoting competition in the mining sector, ensuring fast implementation of projects, reducing subsidies, among others, many of which require non-legislative action in the election year.”