A chieving the projected nine percent growth in the current financial year seemed to have become a little harder after the first quarter numbers. At 7.7 percent in the April- June quarter the economy registered the slowest growth in the last six

quarters. This signals a creeping slowdown due to various domestic and global factors. Notably, the Finance Ministry itself has pegged the growth rate at 8.6 percent while the Planning Commission and a couple of other bodies expect it to be nearnine percent. In sector after key sector, the economy recorded a downturn as against the same quarter in the last fiscal. To begin with, in the first quarter of 2010- 11, the growth rate recorded was 8.8 percent.

Infrastructure logged a growth of 7.7 percent in the previous quarter as against a mere 1.2 percent in the first quarter of this financial year.

Manufacturing was down to 7.2 percent from 10.6 percent in the same period. There was a marked slowdown in government spending as well, from 8.2 percent to 5.6 percent. Services suffered a marginal decline, from 10.4 percent to 10 percent, though agriculture recorded a moderate jump from 2.4 percent to 3.9 percent in the two quarters under review.

Given the continuing RBI concern with inflation, the pressure on liquidity was reflected in poor investment in both private and public sectors. High interest rates have dampened the off- take of consumer durables and affected the sale of new cars.

Government investment was down from 11.1 percent in the previous years first quarter to 10.4 percent in the first quarter this year. Exports too have suffered, though trade deficit was nearly nine percent due to higher imports. However, on the day the latest growth data was released, the Sensex still recorded handsome gains, continuing its rise for the second consecutive day this week. It was clearly because the market had already discounted the dip in the overall growth rate. Anything above seven percent growth when the global cues were none too bright was par for the course for market men. In fact, the latest numbers are a warning to the policy- makers. They ought to concentrate on removing infrastructural bottlenecks, step up spending in the vital sectors and plug leakages from the bourgeoning social sector spending.

Another worrying data concerns the fiscal deficit.

More than half of the projected deficit for this fiscal had already been logged, thus raising concerns whether the year will see a major overrun over the budgeted numbers. Given the political turmoil and the inability of the Government to get its act together only the most hardened optimists will bet on a nine percent growth in 2011- 12.

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