Dragged down by the weakness in the manufacturing sector, India’s economic growth is projected to be less than 5 per cent in 2013-14. This will be the second successive year of sub-5 per cent growth.

However, the silver lining is that the estimate for the current fiscal year is better than the decade-low growth of 2012-13. According to the Central Statistical Organisation (CSO), the economy is expected to grow 4.9 per cent this fiscal year vis-a-vis 4.5 per cent in 2012-13.

The new estimate could prompt Finance Minister P Chidambaram to announce a few measures to boost the economy, in the Interim Budget, scheduled to be tabled on February 17. These measures could include lowering excise duty (levied at the factory gate) on manufactured products, especially consumer goods.

Call for duty cuts

Heavy Industries Minister Praful Patel has already pitched for a reduction in the duty on automobiles, particularly on commercial vehicles, to 8 per cent from 12 per cent now.

With general elections around the corner, a growth estimate below 5 per cent is bad news for the UPA Government. However, it may project the average growth during its 10-year rule, which is now 7.5 per cent, against 6.2 per cent from 1994-95 to 2003-04.

Although a better-than-normal monsoon may boost the farm sector, mining continues to be in decline while growth in the manufacturing sector has turned negative. At the same time, the services sector, which accounts for nearly 60 per cent of GDP, is likely to moderate.

Industry unimpressed

Commenting on the latest estimate, Chandrajit Banerjee, Director-General of CII, said that with demand not showing visible signs of a pick-up owing to weak consumption, investment and Government expenditure, the green shoots of recovery are yet to become apparent. What is worrisome is the poor performance estimated in the mining and manufacturing sectors.

“The growth rate would have been lower had it not been for the favourable base effect of last year,” he said.

Echoing that sentiment, FICCI President Sidharth Birla said that the moderating performance of the manufacturing sector is taking a toll on overall economic growth and is impacting the services sector as well.

Assocham felt that given the current state of these employment-intensive segments, it would be difficult to see any revival in the near future.

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