India's 2011-12 Q2 GDP growth slips to 6.9%, FM pegs annual expansion at 7.3%

New Delhi, Nov 30 (PTI) Confirming a slowdown, India's economic growth rate slipped to 6.9 per cent in the second quarter of the 2011-12 fiscal ending March 2012, the lowest in nine quarters, prompting the government to lower its full-year growth projection to 7.3 per cent. Economic growth during the July-September period of 2011-12 fell mainly due to poor manufacturing performance and declining output of the mining industry. Agriculture growth, too, showed moderation during the period. "Taking into account the trend of the last two quarters, I expect the GDP growth to be 7.3 per cent (in 2011-12)," Finance Minister Pranab Mukherjee told reporters. The economy grew by 8.5 per cent last financial year. On the back of the tight monetary policy being followed by the country's central bank RBI to tame inflation, the growth rate in the manufacturing sector nosedived to 2.7 per cent in the July-September quarter from 7.8 per cent in the corresponding quarter of the previous fiscal. Mining and quarrying sector output declined by 2.9 per cent, compared to a growth of 8 per cent in the second quarter of 2010-11. Agriculture production slipped to 3.2 per cent from 5.4 per cent in the corresponding period last fiscal. GDP growth in the second quarter last fiscal had stood at 8.4 per cent. "We are having multiple problems... slow growth of Europe and America... problems within the country and outside the country as well," Mukherjee said, adding, "We shall have to try to face the situation and to see what best we can do at this given situation." According to the figures released by the government, India's 2011-12 second quarter GDP at factor cost at constant (2004-05) prices is estimated at Rupees 12,272.54 billion (about USD 240 billion) as against Rs. 11,484.72 billion (about USD 225 billion) in Q2 of 2010-11, showing a growth rate of 6.9 per cent over the corresponding quarter of previous year. The Reserve Bank of India has already lowered its growth projection for the current fiscal to 7.6 per cent from the earlier estimate of 8 per cent on account of the global slowdown and high domestic inflation. The latest revision to 7.3 per cent is significantly lower than Mukherjee's Budget projection of 9 per cent growth this fiscal. India Inc has blamed the decline on tight monetary policy, which has increased the cost of borrowings and thereby slowed down industrial growth by hindering fresh investment. RBI has hiked interest rates 13 times since March, 2010, to tame demand and curb inflation. Headline inflation has been above the 9 per cent-mark since December last year. The government and the RBI have accepted that high interest rates may hurt the country's growth prospects, but the apex bank has underlined that bringing inflation under control is its major agenda. PTI