The Indian economy grew at a sluggish 5.5 percent in the first quarter of this fiscal in comparison to 8 percent in the corresponding quarter of the previous financial year owing to poor performance of manufacturing, mining and agriculture sector, official data showed Friday.
The April-June quarter data is slightly better than the 5.3 percent growth registered in the country's gross domestic product (GDP) during the quarter ended March 31, 2012.
The figure is better than analysts' expectations of 5.2 percent.
The sluggish growth in the first quarter was mainly on account of a mere 0.2 percent growth in the manufacturing sector, against 7.3 percent in the corresponding quarter of previous fiscal, even as farm sector growth dropped from 3.7 percent to 2.9 percent, according to data released by the Central Statistical Organisation (CSO).
Construction and services sector, which includes insurance, finance and realty, grew at 10.9 percent and 10.8 percent, respectively, during the quarter under review. These two groups had expanded by 3.5 percent and 9.4 percent, respectively, in the first quarter of 2011-12.
Seeing the data, top economic policymakers said the growth numbers were consistent with the government's estimates.
"These numbers are consistent with the overall economic growth of 6.7 percent projected by us," said C. Rangarajan, chairman of the prime minister's Economic Advisory Council.
Rangarajan said the economic growth is likely to remain sluggish even in the second quarter of the current financial year.
"You will see pick-up in the second half of the year. In the third and fourth quarter, one should expect the rebound," he said.
The Indian economy has been under stress in the recent quarters largely due to poor performance of the industrial and farm sector. The country's GDP growth slumped to 6.5 percent in 2011-12, which is even lower than the 6.7 percent level achieved during the global financial crisis of 2008-09. The economy had expanded by 8.4 percent in 2010-11.
Planning Commission Deputy Chairman Montek Singh Ahluwalia also expressed a similar hope saying the growth would pick up in the second half of the fiscal.
"By the end of the second quarter and especially in the third quarter, we will have a rebound," Ahluwalia said.
He, however, said the revival in the economy would depend on investments, both from public as well as private sectors.
India's GDP at factor cost at constant (2004-2005) prices is estimated at Rs.13,06,276 crore in the first quarter of 2012-13 as compared to Rs.12,38,738 crore during the corresponding period of last year, showing a growth rate of 5.5 percent, the CSO data showed.
"GDP for the first quarter has marginally improved to 5.5 percent. While the slight improvement over fourth quarter of 2012 is comforting, the individual components of GDP are of concern," said Anis Chakravarty, senior director, Deloitte in India.
"Service sector growth, which had earlier held at over 8 percent, has steeply declined to 6.9 percent -- driven partly by low transport sector output. Further, industrial activity has not picked up -- high capital goods variance with low mining and manufacturing output remains a cause of concern," Chakravarty said.