India shocked by weak growth data from Jan.-Mar. 2012, has highest deficit to GDP ratios in Asia

.


5/31/11, "India jolted by weak growth data," AFP, Reuters, P. MacRae

"India's economy grew a lower-than-expected 5.3 percent in the final quarter of the fiscal year, data showed Thursday, piling pressure on the embattled government.

The figures from the national statistics office also showed the economy expanded 6.5 percent for year to March 2012 -- lower than the government's estimate of 6.9 percent and far below the 8.4 percent of the previous year.

"The figures have reconfirmed the Confederation of India's own estimates, which show that the economy is in the throes of a serious slowdown," said Chandrajit Banerjee, director general of the leading industry body.

The final quarter of the last financial year saw a contraction in the key manufacturing sector, which saw output shrink 0.3 percent owing to flagging domestic and overseas demand, compared with 7.3 percent expansion a year earlier.

Farm, construction and mining production grew only modestly.

The figures came as the rupee hit a record 56.50 low against the dollar and the government faced a nationwide strike to protest against the highest-ever petrol price hike that was put in place to curb oil firms' losses....

Analysts had forecast growth of 6.1 percent in the January-March quarter and the poor performance is likely to at to the gloom shrouding Asia's third-largest economy.

The government has little room to increase spending to spur growth and interest rates cannot be cut significantly because of high inflation, which is sitting at around 7.0 percent.

Dariusz Kowalczyk, senior economist at Credit Agricole, had spoken of "extreme pessimism" about India's prospects before the data was released.

"Fundamentals are indeed weak with slower growth, elevated inflation and the highest deficit-to-GDP ratios in Asia," he said, forecasting annual growth will stay below seven percent until after the general elections in 2014.

Prime Minister Manmohan Singh, 79, admitted last week his scandal-tainted Congress-led ruling coalition "need to do better" to get the once red-hot economy moving again."...

.