News / Asia

India’s Economic Growth Slips to 3-Year Low

An Indian laborer carries a bag of potatoes at a warehouse in Jammu, India, July 31, 2012.
An Indian laborer carries a bag of potatoes at a warehouse in Jammu, India, July 31, 2012.
Anjana Pasricha
NEW DELHI — Economic growth in India has slipped to a three-year low, confirming a sharp slowdown in Asia’s economy.
 
The 5.5 percent economic growth from April to June was slightly higher than in the previous three months. But it brought no cheer to a country where the economy has stalled in recent months.

Virtually all sectors such as manufacturing, services and agriculture posted slower growth compared to the same period last year, said Dharmakirti Joshi, chief economist at ratings agency CRISIL in Mumbai.   
 
“The investment growth is close to zero, the private consumption has slowed down materially and if you look at exports, the external demand, that also is beginning to slow down,” Joshi said.
 
While India has been affected by the global slowdown, economists say domestic factors are largely responsible for the plummeting growth.
 
They say one of the main worries centers around persistently high inflation and high interest rates, which have hit consumption -- the main driver of India’s growth.  
Another key concern is that economic reforms continue to be stalled due to a political impasse. The government, embroiled in a number of corruption scandals, has been on a collision course with opposition parties. As a result, key legislation, which could revive the economy, is stuck in a deadlocked parliament.     
 
The policy paralysis has unnerved investors. In recent months, a number of domestic and foreign businesses have put investment plans on hold. The government admits restoring investor confidence could be key in determining how the economy fares.
 
The Deputy Chairman of India’s Planning Commission, Montek Singh Ahluwalia, is optimistic and hopes for a rebound in coming months.  
 
“A lot will depend really on what happens to the level of investment, both public sector investment and of course private investment," he said. "I think it is most likely in the second half of the year that investment intentions will begin to change.”   
 
Taking note of the sagging economy, Prime Minister Manmohan Singh appointed a new finance minister a month ago, and there are hopes that he will take steps to address concerns of investors.  
 
The government estimates that the economy will grow by 6.8 percent this fiscal year. But most analysts project much lower growth of around 5.5 percent.  
 
That is a huge disappointment for a country which just a year ago, was hoping to hit double digit growth, and which has been widely described as an engine to revive the global economy.

You May Like

EU Court Fines Poland for Hosting CIA 'Black Sites'

Ruling is first time a court has acknowledged suspects were held and tortured at the sites, under US program launched following the 9/11 terrorist attacks More

Migrant Issues Close to Home Spur Groups to Take Action

Groups placing water, food in the desert, or aiding detainees after release, have one common goal: no more deaths of migrants crossing illegally into the US More

Video At AIDS Conference, Prevention Pill Stirs Excitement

Truveda shows promise, spurring debate over access and other approaches More

This forum has been closed.
Comment Sorting
Comments
     
by: Mike from: California
September 02, 2012 1:56 PM
According to what I read in The Economist, India has the most stifling and bureaucratic government in the world. It takes years to get permits for building, months or years to get through the courts, and a rigid social structure designed to "keep people in their place." It is quite sad but it does work to the advantage of the ruling class to maintain a society of special privilege. But India does have oportunities and I hope it sees them.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Israel Targets Gaza Supply Tunnelsi
X
July 24, 2014 4:42 AM
The Israeli military has launched a ground operation in Gaza to destroy the myriad tunnels that may have been used to smuggle weapons to Hamas. VOA's Zlatica Hoke reports that could mean more hardship for the people of Gaza, who obtain some of their essential supplies through these underground passages
Video

Video Israel Targets Gaza Supply Tunnels

The Israeli military has launched a ground operation in Gaza to destroy the myriad tunnels that may have been used to smuggle weapons to Hamas. VOA's Zlatica Hoke reports that could mean more hardship for the people of Gaza, who obtain some of their essential supplies through these underground passages
Video

Video MH17's 'Black Boxes' Could Reveal Crash Details

The government of Malaysia now has custody of the cockpit voice and flight data recorders from Malaysia Airlines Flight 17, which was hit by a missile over Ukraine before crashing last week. As VOA's Carolyn Presutti reports, the so-called black boxes may hold information about the final minutes of the flight.
Video

Video Living in the Shadows Panel Discussion

Following a screening of the new VOA documentary, "AIDS - Living in the Shadows," at the World AIDS conference in Melbourne, a panel discussed the film and how to combat the stigma associated with HIV/AIDS.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video Relic of Saint Draws Catholics Worried About Immigration Issue

A Roman Catholic saint who is a figure of devotion for those crossing the border into the United States is attracting believers concerned about the plight of undocumented immigrants. Mike O'Sullivan reports from Los Angeles, where a relic of Saint Toribio has drawn thousands to local churches.
Video

Video US Awards Medal of Honor for Heroics in Bloodiest of Afghan Battles

U.S. combat troops are withdrawing from Afghanistan, on pace to leave the country by the end of this year. But on Monday, U.S. President Barack Obama took time to honor a soldier whose actions while under fire in Afghanistan earned him the Medal of Honor. VOA's Jeff Seldin has more from the Pentagon.
Video

Video Ukraine Rebels Surrender MH17 Black Boxes

After days of negotiations, a senior separatist leader handed over two black boxes from an airliner downed over eastern Ukraine to Malaysian experts early Tuesday. While on Monday, the U.N. Security Council unanimously demanded that armed groups controlling the crash site allow safe and unrestricted access to the wreckage.
Video

Video In Cambodia, HIV Diagnosis Brings Deadly Shame

Although HIV/AIDS is now a treatable condition, a positive diagnosis is still a life altering experience. In Cambodia, people living with HIV are often disowned by friends, family and the community. This humiliation can be unbearable. We bring you one Cambodian woman’s struggle to overcome a life tragedy and her own HIV positive diagnosis.

AppleAndroid