Economy probably grew 5.5 percent in July-Sept qtr - Chidambaram

PUNE, India Sat Nov 24, 2012 2:23pm IST

1 of 2. Finance Minister Palaniappan Chidambaram speaks during a news conference in New Delhi February 29, 2008.

Credit: Reuters/B Mathur/Files

Rajalakshmi (C), 28, smiles after winning the Miss Wheelchair India beauty pageant in Mumbai November 26, 2014. REUTERS/Danish Siddiqui

Miss Wheelchair India

Seven women from across India participated in the country's second wheelchair beauty pageant, which aims to open doors for the wheelchair-bound in modelling, film and television, according to organisers  Slideshow 

PUNE, India (Reuters) - India's economic growth probably languished near a three-year low of 5.5 percent in the quarter that ended in September, Finance Minister P. Chidambaram said on Saturday, a pace that will increase the pressure on the government to enact tough reforms.

Gross domestic product data for the July-September quarter is due on November 30.

A sub-6 percent growth rate, for the third quarter in a row, will add pressure on the government to boost economic activity by fast-tracking stalled tax and regulatory reforms. It will also bolster calls for an interest rate cut by the country's central bank, which has so far ruled out any before January, citing high inflation.

"When growth declines to 5.5 percent as it has in the first quarter (April-June) of this financial year and when the growth is likely to be around 5.5 percent in the second quarter of this financial year, it goes without saying we are facing a difficult situation," Chidambaram told a bankers' conference.

"We have to overcome this difficult situation through innovation, finding new ways of increasing production of good and services and finding new ways to help the poor of the country."

India, Asia's third-largest economy, once boasted near double-digit growth but has been hard hit by the global economic downturn and a series of policy missteps.

Chidambaram told Reuters earlier this month that growth for the current financial year that ends in March could be as low as 5.5 percent, which would be the slowest rate of expansion since 2002/03.

With the economic slowdown beginning to bite India's middle class, the government faces the challenges of reviving the economy before it seeks a re-election in 2014. A weak economy has also hit tax revenues, compounding the nation's fiscal woes and raising the spectre of a credit rating downgrade.

Global rating agencies have threatened to downgrade India's sovereign credit rating to junk if it fails to put its fiscal house in order.

Chidambaram said the government will launch direct cash payments for welfare programmes and subsidies on January 1 in 16 states with an aim to expand the programme across the country by the end of 2013.

Billions of dollars are frequently siphoned off from welfare schemes.

(Reporting by Swati Pandey; Writing by Rajesh Kumar Singh; Editing by Sanjeev Miglani)

FILED UNDER:

REUTERS SHOWCASE

WTO Trade Deal

WTO Trade Deal

WTO clinches first global trade deal in its history  Full Article 

Kashmir Attack

Kashmir Attack

Ten dead in Kashmir's worst militant attack in more than a year  Read 

OPEC Meeting

OPEC Meeting

Saudis block OPEC output cut, oil price sinks further.  Full Article 

E-Commerce Boom

E-Commerce Boom

Online grocers come up trumps in India's e-commerce boom   Full Article 

GDP, RBI Preview

GDP, RBI Preview

GDP growth set to weaken, business wants reforms more than rate cut  Full Article | Related Story 

Jaitley to Rajan

Jaitley to Rajan

Jaitley likely to meet Rajan on Monday to urge rate cut  Full Article 

Banking Sector

Banking Sector

India moves to allow more businesses to offer basic financial services.  Full Article 

Jamini Roy

Jamini Roy

Photo Gallery – Bengali household name Jamini Roy’s paintings  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage