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Dec 03, 2012, 01.54 PM IST | Source: Moneycontrol.com

Industry keeps overall Q2 GDP growth weak at 5.3%: CRISIL

CRISIL Research has come out with its report on "Industry keeps overall GDP growth weak at 5.3%" based on GDP data of Q2 FY13. According to the research firm, GDP growth is expected to remain subdued over the remaining quarters of this fiscal as well.

CRISIL Research has come out with its report on "Industry keeps overall GDP growth weak at 5.3%" based on GDP data of Q2 FY13. According to the research firm, GDP growth is expected to remain subdued over the remaining quarters of this fiscal as well.

The Indian economy grew at 5.3 per cent in the Q2FY13. This is the third consecutive quarter in which GDP growth has hovered around this level. Industry continues to be the weak link as it grew at 2.8 per cent in Q2FY13. This is the lowest industry growth in Q2 since 2004. Manufacturing, impacted by policy hurdles and slowing consumption/investment demand, grew at just 0.8 per cent. Services, the best performing among the three sectors, grew only at 7.2 per cent in Q2FY13, much lower than Q2FY12. Private consumption growth remained muted at 3.7 per cent due to depressed consumer sentiment and high interest rates. Exports witnessed a sharp slowdown reflecting weak global demand.

Given the global economic environment and the domestic policy hurdles, GDP growth is expected to remain subdued over the remaining quarters of this fiscal as well. We, therefore, expect GDP to grow at 5.5 per cent during FY13. Although government has announced some reforms and policy measures recently to revive growth, they will take a while to play out.

Agriculture, adversely impacted by the delayed monsoons, grew at 1.2 per cent. Kharif output is expected to be lower by around 10 per cent. However, recovery in monsoons during the latter part of the season is likely to lead to a better rabi output.

Within industry, mining continues to be impacted by policy logjam and grew at a mere 1.9 per cent. Industrial slowdown now looks both well entrenched and widespread as manufacturing output growth for the H1FY13 is mere 0.5 per cent after a dismal performance in FY12.

Services growth recovered marginally from Q1FY13 marked by an improvement in trade hotels and transport services which grew at 5.5 per cent, still substantially lower than 9.5 per cent in Q2FY12.

Private consumption growth in Q2FY13 is at its lowest since June 2009, indicating a sharp demand slowdown. Although fixed investment shows improvement in Q2FY13 as compared to Q1FY13, it is too early to conclude that investment cycle has bottomed out.

Government consumption expenditure growth continued to be strong at 8.7 per cent in Q2FY13, not a good sign so far as fiscal health of the government is concerned.

Exports saw a sharp decline in Q2FY13 and grew at 4.3 per cent, taking it closer to the global financial crisis levels. Imports also witnessed a slowdown due to a contraction in imports of gold and silver and precious metals and capital goods.

Disclaimer: CRISIL Limited has taken due care and caution in preparing this Report. Information has been obtained by CRISIL from sources, which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. CRISIL Limited has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this Report. The Centre for Economic Research, CRISIL (C-CER) operates independently of and does not have access to information obtained by CRISIL's Ratings Division, which may in its regular operations obtain information of a confidential nature that is not available to C-CER. No part of this Report may be published / reproduced in any form without CRISIL's prior written approval.

The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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