The Indian economy after reporting
fairly robust growth of over 9 per cent during
2005-08, moderated to a growth of 6.7 per
cent in 2008-09 because of the global
financial crisis. Because there was fiscal and
monetary space, timely stimulus allowed the
economy to recover fairly quickly to a growth
of 8.4 per cent in 2009-10 and 2010-11. Since
then, however, the fragile global economic
recovery and a number of domestic factors
have led to a slowdown once again.
1.2 The slowdown in the Indian economy
that began in the second quarter of 2011-
12, when the growth rate declined to 6.7 per
cent from a level of 8.0 per cent in the first
quarter, continued in subsequent quarters.
Growth has been in the range of 5.3-5.5 per
cent in the last three quarters (Q4 of 2011-
12 to Q2 of 2012-13). The slowdown is not
just confined to India.There has been a
general slowdown in the global economy
which has been passing through a rather
prolonged phase of uncertainty. The recovery
from the global crisis of 2008-09 in the
advanced economies has been uneven, with
a decisive resolution yet to emerge to the
sovereign debt problem in the Euro zone.
Having achieved a GDP growth of 5.1 per
cent in 2010, the rate of growth in the global
economy declined to 3.8 per cent in 2011 and
is expected to decline further to 3.3 per cent
in 2012, as per the World Economic Outlook
released by the IMF in October 2012. The
rate of growth of advanced economies
CHAPTER I
OVERVIEW OF THE ECONOMY
declined from 3.0 per cent in 2010 to 1.6 per
cent in 2011 and is expected to decline
further to 1.3 per cent in 2012. Even the
emerging economies have slowed down
during this period, partly as a result of the
slowdown in their export markets. China’s
growth declined from 10.4 per cent in 2010
to 9.2 per cent in 2011 and is expected to be
7.8 per cent in 2012. Brazil’s growth dipped
from 7.5 per cent in 2010 to 2.7 per cent in
2011 and is expected to be 1.5 per cent in
2012.
1.3 The growth rate of the Indian
economy (measured in terms of GDP at factor
cost at 2004-05 prices) was 5.4 per cent in
the first half (H1) of year 2012-13 as against
7.3 per cent in the corresponding time period
of the previous year. The growth for the full
year of 2011-12 was 6.5 per cent vis-à-vis
the growth rate of 8.4 per cent achieved in
each of the previous two years i.e. 2009-10
and 2010-11. The slowdown has been all
pervasive and almost all the sectors have
been affected. The growth rate has been 2.1
per cent for agriculture and allied sectors, 3.2
per cent for industry sector and 7.0 per cent
for the services sector in the first half of
2012-13. The growth rates were 3.4 per cent,
4.7 per cent and 9.5 per cent, for agriculture,
industry and services, respectively in H1 of
2011-12. The growth of GDP in the first and
second quarters of 2012-13 was 5.5 per cent
and 5.3 per cent respectively
The Indian economy after reportingfairly robust growth of over 9 per cent during2005-08, moderated to a growth of 6.7 percent in 2008-09 because of the globalfinancial crisis. Because there was fiscal andmonetary space, timely stimulus allowed theeconomy to recover fairly quickly to a growthof 8.4 per cent in 2009-10 and 2010-11. Sincethen, however, the fragile global economicrecovery and a number of domestic factorshave led to a slowdown once again.1.2 The slowdown in the Indian economythat began in the second quarter of 2011-12, when the growth rate declined to 6.7 percent from a level of 8.0 per cent in the firstquarter, continued in subsequent quarters.Growth has been in the range of 5.3-5.5 percent in the last three quarters (Q4 of 2011-12 to Q2 of 2012-13). The slowdown is notjust confined to India.There has been ageneral slowdown in the global economywhich has been passing through a ratherprolonged phase of uncertainty. The recoveryfrom the global crisis of 2008-09 in theadvanced economies has been uneven, witha decisive resolution yet to emerge to thesovereign debt problem in the Euro zone.Having achieved a GDP growth of 5.1 percent in 2010, the rate of growth in the globaleconomy declined to 3.8 per cent in 2011 andis expected to decline further to 3.3 per centin 2012, as per the World Economic Outlookreleased by the IMF in October 2012. Therate of growth of advanced economiesCHAPTER I
OVERVIEW OF THE ECONOMY
declined from 3.0 per cent in 2010 to 1.6 per
cent in 2011 and is expected to decline
further to 1.3 per cent in 2012. Even the
emerging economies have slowed down
during this period, partly as a result of the
slowdown in their export markets. China’s
growth declined from 10.4 per cent in 2010
to 9.2 per cent in 2011 and is expected to be
7.8 per cent in 2012. Brazil’s growth dipped
from 7.5 per cent in 2010 to 2.7 per cent in
2011 and is expected to be 1.5 per cent in
2012.
1.3 The growth rate of the Indian
economy (measured in terms of GDP at factor
cost at 2004-05 prices) was 5.4 per cent in
the first half (H1) of year 2012-13 as against
7.3 per cent in the corresponding time period
of the previous year. The growth for the full
year of 2011-12 was 6.5 per cent vis-à-vis
the growth rate of 8.4 per cent achieved in
each of the previous two years i.e. 2009-10
and 2010-11. The slowdown has been all
pervasive and almost all the sectors have
been affected. The growth rate has been 2.1
per cent for agriculture and allied sectors, 3.2
per cent for industry sector and 7.0 per cent
for the services sector in the first half of
2012-13. The growth rates were 3.4 per cent,
4.7 per cent and 9.5 per cent, for agriculture,
industry and services, respectively in H1 of
2011-12. The growth of GDP in the first and
second quarters of 2012-13 was 5.5 per cent
and 5.3 per cent respectively
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