India GDP Growth Misses Expectations

(RTTNews) - India's economic growth missed expectations during the January to March quarter, as investment bottlenecks hindered activities in manufacturing and mining.

Gross domestic product grew 4.6 percent year-on-year, the same rate as seen in the final three months of 2013, data from the Central Statistics Office showed Friday. The growth rate was expected to rise moderately to 4.7 percent.

Both mining and manufacturing dragged overall growth during the January to March period.

Mining and quarrying output slid 0.4 percent, but slower than the 1.2 percent fall in the preceding quarter. Manufacturing output declined 1.4 percent versus the prior period's 1.5 percent drop.

Meanwhile, output of the farm sector advanced 6.3 percent, much faster than the 3.7 percent growth posted in the previous quarter. The increase in construction output rose to 0.7 percent from 0.6 percent.

During the fiscal year ended March 2014, the economy expanded 4.7 percent from the previous year.

The Purchasing Managers' survey from Markit Economics early this month showed that the private sector activity contracted for the second straight month.

According to survey participants, a difficult economic climate, combined with the general elections and a further drop in new orders had all contributed to the latest fall in business activity.

Economic conditions are expected to improve after the National Democratic Alliance leader Narendra Modi won a landslide victory in the general elections. Prime Minister Modi is widely expected to push ahead with economic reforms and give thrust to infrastructure and power sectors.

Next week, the Reserve Bank of India is widely expected to leave interest rates unchanged in its policy session on Tuesday.

High inflation is likely to force the central bank to sit tight this time, while markets would be looking for some clues from Governor Raghuram Rajan regarding any change to policy stance, after the pro-growth Modi-led government took charge this week.