New Delhi: The latest health report of the economy is not good. Despite attempts by the Government to talk up the growth story, the country's GDP has declined sharply to 5.3 per cent from last year's healthy growth of 8.9 per cent.
This is slowest quarter growth for the year 2008-2009. Despite the drop, however, the Government is still hopeful of ending this year with a 7 per cent growth.
Economic Affairs Secretary, Ashok Chawla says, "Our expectation still is that the fourth quarter is going to show robust growth which will add up close to seven per cent for the year."
But the Industry does not think so. CII says achieving 7 per cent will be extremely difficult.
CII Director General, Chandrajit Bannerjee says, "It's a tall order. It's a very, very tough situation. We need to take certain concrete and quick measures."
Bajaj Auto Chairman, Rahul Bajaj adds, "2009 for the manufacturing and the service sector will be a very difficult year indeed."
It will be a difficult year because the third quarter industrial output is down to 2.4 per cent against 8 per cent for the same period last year. Agricultural output too down 2.2 per cent compared to 6.9 per cent over the same period last year.
Economists say the weak numbers were expected and the fiscal position of the country is a bigger worry.
MD & Region Head Southeast Asia of S&P, R Ravi Mohan says, "I think the bigger constraint is not so much the economic growth but the fiscal position of the Government."
But with a slew of stimulus packages under implementation, the fiscal position is only likely to deteriorate.
The only silver lining is the service sector which grew by a strong 17.3 per cent against 5.5 per cent in the year-ago period. The big questions are - will this be the worst quarter and will the Government be able to generate growth?