HEALTH OF INDIAN ECONOMY IN QUARTER 4 OF 2011

The Indian economy is slowing down as it grew at 7.8 per cent in the fourth quarter of financial year 2011 from 9.4 per cent in the corresponding period last fiscal.
Economists have warned that growth could slip even further this year as the investment cycle is sluggish, manufacturing is not robust and agriculture may not be able to replicate its good show, which boosted GDP numbers for the full year.
For the full year, the economy grew 8.5 per cent in 2010-11 from 8 per cent in 2009-10 due to better farm output and construction and financial services performance.
Agriculture powered GDP growth for the year by registering 6.6 per cent growth in 2010-11 against 0.4 per cent in the previous fiscal. This was helped by a record food grain production of 235.88 million tonnes.
Services saw a marginal dip in growth, while manufacturing performance was not strong indicating softness in industrial activity.
Reacting to GDP numbers,  high inflation could moderate the pace of growth in the current fiscal.
Given the difficult macro-economic scenario, analysts expect growth to slip even further, with some suggesting it might drop to sub-8 per cent, while the government forecasts are higher.
The economy is struggling as inflation has been stubbornly high and to control that there have been a series of interest rate hikes which in turn slow down demand and growth is sacrificed.
Global commodity prices especially oil are skyrocketing putting more pressure on the fiscal situation. New investments in manufacturing are not very robust, a sign of weak corporate confidence, uncertain policy environment and delays in project clearances. Even the stock markets are languishing.
All these factors have combined to put the brakes on the India growth story.