GDP growth likely edged up to 4.6 percent last quarter

BANGALORE Tue Nov 26, 2013 12:25pm IST

1 of 2. A worker walks over giant pieces of concrete that will be used to make tunnels for the metro railway, at a casting yard in Chennai November 20, 2013.

Credit: Reuters/Babu

BANGALORE (Reuters) - India's economic growth likely picked up slightly in the July-September quarter as improved manufacturing activity steered it from a four-year low in the previous three months, a Reuters poll showed on Tuesday.

Any improvement would be welcome news for the government as a string of opinion polls forecast a poor performance for the ruling party in general elections which must be held by next May.

Economic growth virtually halved in two years to 5 percent in the last fiscal year - the lowest level in a decade - and most economists surveyed by Reuters last month expect 2013/14 to be worse.

The consensus of 40 economists showed gross domestic product expanded 4.6 percent year-on-year in the last quarter, better than the 4.4 percent in the previous three months, which was the lowest since the global financial crisis.

"It is only a marginal improvement with much of the support from a slight recovery in manufacturing sector," said Upasna Bhardwaj, an economist at ING Vysya Bank.

A moderate recovery in Indian factories and exports were probably the main drivers for an increase in overall growth in the quarter through September. Annual industrial output picked up 2 percent in September, driven by an uptick in export and domestic orders.

Stronger global demand for India's exports also led to an increase in production, with exports growing 11.15 percent annually in September.

Also, a good monsoon should have boosted rural income and perked up flagging consumer demand.

However, a dearth of investment lies at the heart of India's economic malaise.

Little improvement is expected ahead of the general election, with investors doubting whether Prime Minister Manmohan Singh's minority government can force through any bold actions between now and then.

Radhika Rao, an economist at DBS in Singapore, said euphoria surrounding Singh's earlier reform plans had eased after they failed to materialise.

"It is not surprising that the private sector keeps expansion plans on ice," Rao added.

With wholesale price inflation moving back above the Reserve Bank of India's perceived comfort level of 5 percent and consumer inflation quickening to more than 10 percent, there is little expectation the central bank will act to ease policy boost growth.

In face, new RBI chief Raghuram Rajan has hiked interest rates twice in as many months since September, tackling rising prices head on.

(Polling and analysis by Sarbani Haldar; Editing by Kim Coghill)

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Comments (1)
jvaishnav47 wrote:
What is disheartening that India even though potential by natural resources, intellectuals ,still remains poor country ,since
Corruption is rampant, deficit governance prevails, all big scams have taken place Under the nose of the UPA govt, however highlighted by CAG, CVC & Electronic media, Billions of public money siphoned off & as yet govt has not recovered any money from scamsters so could not bring back black money lying in foreign Banks
Loot of natural resources is allowed by states /central govt,
govt could not promote export so to reduce current account deficit,
Public sector Banks are passing through crucial state since have alarming amount of bad loans, restructured loan shall add fuel in to fire, Banks are facing liquidity crunch.
Govt go on spending tax payer /public money as equity infusion in to decades long loss making entities like Air India, India Railways 7 now public sector Banks. Govt needs to come out from such entities since i is enough, public money is being wasted, it creates fiscal deficit

Nov 26, 2013 5:15pm IST  --  Report as abuse
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