Numbers don't lie: At 5.3%, Growth slowest since 2003

All the prime minister's men have been telling the country that India will continue growing at more than 7%. The claims are only to be expected in an election year. But the PM's team does not have the numbers to back these projections.

The Central Statistical Organisation, the statistics agency of the government, reported on Tuesday that the Gross Domestic Product (GDP) in the three months from October to December grew by 5.3% only, as against 8.9% a year ago and 7.6% in the three months ending June 30, 2008. This is the slowest growth since the last quarter of 2003. Most economists had been expecting a growth rate in the range of 6-6.3%. GDP is the total value of goods and services produced in an economy.

The government has been expecting the GDP to grow at a rate of 7.1% for the financial year 2008-09. That will no longer be possible. The GDP growth rate will have to be revised. "A 5.3% growth means the GDP growth rate for the full year will have to be revised down," said Abheek Barua, chief economist at HDFC Bank.

Nine months ending December 2008 has seen a growth of 6.9%. "For the government to achieve a growth of 7.1%, the economy will have to grow at 7.6% in the three months from January to March 2009. This appears optimistic given the weakening global environment," said Rohini Malkani, economist at Citigroup India.

Economists are already predicting lower growth rates in the days to come. "We are trimming our GDP forecast for the financial year 2008-09 to 6.4% from 6.8% and expect growth to slow further to 5.3% in FY10," said Sonal Varma, an economist at Nomura Securities.

Manufacturing, farm sectors hit, p22

growth slows, but not investments, p23

Team DNA/ DNA-Daily News & Analysis Source: 3D Syndication