Economic growth in India has slowed to 4.4% annual rate during the second quarter of this year, its slowest performance in four years.
The slowdown in the country’s economic growth, plus the falling rupee, an unstable stock market, and dysfunctional politics worry analysts both in India and abroad.
The rupee has devalued by approximately 12% over the last four weeks. As India is a net importer this is serious problem for the country and will push up prices.
The Mumbai Sensex, India’s stock exchange, ended 3.8% down for the month after gaining 1.2% today. At the end of day’s trading the benchmark Sensex reached 8619.72 points.
Economic growth at 4.8% during the first quarter was also low.
CNN quotes Anjalika Bardalai, from Eurasia Group in London, who said “This number is a little bit lower than consensus expectations, but expectations were quite low to begin with.”
According to the IMF (International Monetary Fund), India should see 5.6% growth in fiscal 2013. However, that figure today may seem rather optimistic, economists have commented.
Prime Minister of India, Manmohan Singh, said today that the fundamentals of the country’s economy continue to be strong, but acknowledged that there is “a difficult economic situation.”
Despite several policy changes, nothing has managed to calm down recent volatility in the country’s economy.
The Wall St. Journal wrote today that in India, concerns about the government’s financial health with large budget and current-account deficits have hurt investor sentiment.
The Central Statistical Organisation, the Indian government’s main data arm, reported that in the first quarter of 2013:
- Agriculture expanded by 2.7%
- Financial services expanded by 9.3%
- Manufacturing sector shrank 1.2%
- Trade and transportation grew by 6.1%
The Hindustan Times wrote today that the recent economic “bleak” performance has been blamed on:
- High inflation
- Low business confidence
- Lower export demand from Western nations
- Slumping investment
Chandrajit Banerjee, director general of the Confederation of Indian Industry, said:
“The GDP figures for first quarter clearly show that the economy continues to be in the throes of a slowdown. The concern becomes more acute when we see that at the present moment, there are no clear indications that the economy has bottomed out. The economy needs the undivided attention of policy makers.”