Recent Trends in GDP Growth Rate

GDP growth rate, measured by the value of all goods and services produced during a year, crashed to a nine-year low of 6.5 per cent in 2011-12 against 8.4 per cent in 2010-11 as per data released by CSO. The last quarter growth rate from January to March, 2012 was the worst at 5.3 per cent in the last 36 quarters. The manufacturing sector contracted 0.3 per cent during the quarter while the services sector grew 8.5 per cent against 9.2 per cent in the corresponding quarter last year, Investment dropped to 5.5 per cent against 7.8 per cent. 

Expenditure estimates showed private consumption expenditure growth had dropped marginally to 6.1 per cent in the last quarter of 2011-12 from 6.4 per cent in the previous quarter. Investment has fallen form a peak of 38 per cent of GDP some years ago to 29.5 per cent in 2011-12. It was 30 per cent in 2010-11.

Year –wise growth rate of GDP in percentage terms in the five years of the Eleventh Plan period form 2007-08 to 2011- 12 was 9.3 per cent in 2007-08, 6.7 per cent in 2008-09, 8.4 per cent in 2009- 10 per cent in 2010-11 and 6.5 per cent in 2011-12 which gives an average GDP growth rate of 7.86 per cent for the Eleventh five year plan which is well short of the plan target of 9 per cent. 

Concerned over the slowest GDP growth rate in nine years, the Prime Minister set up an investment Tracking System to ensure that projects of not hit snags. The system would monitor all private sector projects costing over Rs. 1000 cores, while all public sector projects over Rs. 1000 cores will be tracked by the National Manufacturing competitiveness Council. Private sector projects would be tracked by the Department of financial services in the Ministry of Finance. 

Major factors which pulled down growth were slowdown in consumption high prices, weakening investment, industrial sluggishness, poor infrastructure, falling rupee, overall policy paralysis and the Euro zone crisis.