GDP growth at sub-5% in 2nd straight quarter of FY13

2012-13 yielded decade-low growth of 5%

Economic growth refused to perk up much, rising marginally by 4.8% in the fourth quarter of 2012-13 from almost a two-year low of 4.7% in the previous quarter. The very fact that low 5.1% growth in the fourth quarter of 2011-12 could not lift GDP expansion in Q4 of 2012-13 indicated that wait for green shoots of recovery may get prolonged.   

As the Finance Ministry pinned hopes for bit higher numbers in 2012-13 than a decade low of 5% calculated by the Central Statistics Office in advance estimates in February this year, the first actual number released today showed that CSO was on the dot this time—the economy indeed expanded by 5% last fiscal.

However, it was just the largest sector of the Indian economy -- trade, hotels, transport and communication-- which pushed the economic growth in 2012-13. This sector grew 1.2 percentage points higher at 6.4% in the actual numbers released today than 5.2% in advance estimates. Otherwise almost all major sectors declined significantly in the numbers released today compared to the February estimates.  

The worst affected was mining and quarrying as it suffered a de-growth of 0.6 numbers in the actual GDP numbers compared to 0.4% growth in advance estimates.  It contracted for the second successive quarter – by 3.1% in Q4.

Farm sector growth declined to at least two- year low of 1.4% in the fourth quarter of 2012-13.

Electricity and associated sectors grew by just 2.8% in Q4, 2012-13, the lowest figure in at least two years.
Trade, hotels, transport and communication sector could grow just 6.2% in the fourth quarter, its lowest expansion in 2012-13. Even then, this sector pushed up the yearly growth clearly indicated that the government expected it to do much worse in the fourth quarter.

Financial sector grew 9.1% in Q4 which was highest by any sector in the quarter.

Demand in the economy remained low as private final consumption expenditure rose just 3.81% in Q4 against 4.15% in Q3. Also, gross fixed capital formation, a proxy for investment rate, grew just 3.43% against 4.5% in these two quarters.

However, the government was able to manage its finances much better as it compressed expenditure. Its final consumption expenditure rose just 0.64% against 2.15% in these two quarters. This enabled the Centre to rein in its fiscal deficit at 4.89% of GDP in 2012-13 against 5.2%  pegged in the revised estimates.