Headache for Modi as India posts 4.7% growth
NEW DELHI: India has reported a second straight year of sub-five percent growth, underscoring challenges facing new right-wing Prime Minister Narendra Modi to revive Asia’s third-largest economy.
The economy grew by 4.7 percent in the financial year to March 2014, below the 4.9 estimate of the previousCongress ousted in elections recently by voters angered by economic slowdown, soaring consumer inflation and widespread corruption.
The data would be “a reminder” for the Bharatiya Janata Party (BJP) government “that a lot of work needs to be done in the economy before growth can pick up again,” Nomura Asia interest strategist Vivek Rajpal said ahead of the figures.
Economic growth has crumbled from nearly double-digit rates just three years ago — a level analysts say India must reach again to generate jobs for its vast young population.
The economy expanded 4.6 percent in the final fourth quarter to March 31 from the same period a year earlier, slightly undershooting analysts’ forecasts.
Persistent tightening of both monetary and fiscal policy to curb inflation has fueled downward pressure on growth.
The economy expanded by a decade low of 4.5 percent in the previous year.
Manufacturing shrank 1.4 percent during the final quarter of 2013-14 from a year earlier. But farm output climbed 6.3 percent in the quarter between January and March.
Modi, sworn in Monday as India’s premier and known for his fast decision-making during more than a dozen years as chief minister of prosperous western Gujarat state, has spelt out 10 priority areas to revitalize the economy.
These include swift implementation of a national goods and services tax to speed up business transactions, lifting a ban on mining in dense forest areas and moves to raise the foreign investment cap to revitalize India’s ageing military equipment.
Modi trumpeted “the start of a new era” after the BJP won the first majority in three decades.
Business leaders want him to dismantle the array of bureaucratic controls that have stalled multibillion-dollar investment projects, overhaul creaking infrastructure that impedes productivity, simplify tax levies and ease cumbersome land acquisition rules.
India’s new finance minister Arun Jaitley said earlier in the week he realized that he was taking over at a “challenging time.”
Aside from Modi, Jaitley will be the most important figure in breathing life into the new prime minister’s promise of “better days ahead” and his “Modinomics” mantra of “minimum government, maximum governance.”