Indian GDP growth slides to 5.0% in February 2014: ZyFin Research

Slowing agricultural sector, diminishing aggregate demand hindering growth

The monthly GDP (mGDP) has registered growth of 5.0% in February 2014 (year-on-year [YoY]), as compared to 5.2% in January 2014, according to ZyFin Research's estimate of monthly GDP growth.

The Indian economy's attempt at staging a growth comeback is at risk of losing its footing, with ZyFin's monthly GDP growth estimate signaling a slowdown once again. The second consecutive decline in agricultural sector growth is a prime concern, with predictions of a sub-normal monsoon fuelling expectations of an increase in food inflation. Although it is premature to term this a slowing trend, it is imperative to ward off such short-term weaknesses. The government needs to embark on a public-policy-induced high-spending regime for the economy to gather momentum. Reluctance to take swift action would erode gains registered in the recent past.

The key highlights of the monthly GDP growth Indicator for February 2014 are:

ZyFin estimates YoY GDP growth at 5.0 % for February 2014, as compared to 5.2% in January 2014.

A key reason for the dip is the slowing agricultural sector, which registered its second consecutive decline.

GDP growth for the quarter ended March 2014 is, however, still estimated to breach 5%, which would suggest a better growth environment compared to the quarter ended December 2013.

Inflation, as measured by the GDP Deflator, declined to 5.3%, from 5.7% in the previous month. The GDP deflator is a more comprehensive measure of underlying inflation and is widely used in developed economies.

Growth in the services sector has slipped marginally, in sync with the ZyFin Consumer Outlook Index estimate of declining spending plans among urban consumers.

Commenting on the February GDP numbers, Debopam Chaudhuri, Chief Economist, ZyFin Research, said, The signs of resurgence in Indian economy observed since December 2013 is getting weaker by the day plagued by rising inflation concerns and no major uptick in spending. A major demand push through pro-spending policies needs to be executed with utmost urgency to help maintain the growth trajectory.

Powered by Capital Market - Live News