India’s growth decelerated to 4.7 percent in the October-December quarter last year, the government said Friday, showing that a return to the robust economic expansion of a few years ago remains far from reach.
It was the fifth quarter in a row that year-on-year GDP growth was below 5 percent in Asia’s third-largest economy. The growth rate was down from 4.8 percent for the previous quarter ending in September.
India’s government has struggled to bring back the 8 percent growth rate the country averaged for a decade. That level is what the government says is needed to provide jobs for the 13 million people entering the workforce each year out of a population of 1.2 billion.
Growth in the latest quarter was dragged down by a year-on-year contraction of 1.8 percent in manufacturing and a 1.6 percent drop in mining.
Anjalika Bardalai, an analyst for Eurasia Group, said the weakened numbers for the October-December third fiscal quarter make it all but sure India would have economic growth below 5 percent for a second fiscal year.
Just a few years ago, India was touted as a rising economic power that could even outdo China.
But both growth and enthusiasm began to fade starting in 2012 as shortages of electricity for industry discouraged investment and the decrepit state of roads and ports hampered trade in goods. A tangled bureaucracy to approve new projects and delays in economic reforms added to the disillusion, while high inflation and weak Indian consumer spending have also hurt the economy.
While India’s has managed to bring down its worrisome fiscal and trade deficits in the last year, it has been unable to spur growth. The country’s high inflation makes it difficult for the central bank to lower interest rates to spur growth.
“There is little on the horizon to lift the economy in 2014,” economist Glenn Levine wrote in a report for Moody’s Analytics. “Business confidence is low and the government budget is just about all gone.”
Elections to be held by the end of May could produce a change in the government and possibly open the door for reforms to make the economy more productive and competitive, but regardless of which party wins, Levine said, “it will be a long road back for the Indian economy.”