NEW DELHI: Despite the global meltdown beginning to impact the Indian economy, the government remains optimistic that things will become bright by the end of the year. Data released yesterday by the Central Statistical Organization (CSO) shows the country’s gross domestic product (GDP) grew by 5.3 percent, compared with 7.6 percent in the previous three months and 8.9 percent in the same period last year.

Suggesting there was nothing shocking about the slow growth rate, Economic Affairs Secretary Ashok Chawla said, “The 5.3 percent growth is broadly in line with our expectation. Generally the fourth-quarter contribution to GDP growth is normally better. Our expectation for the fourth quarter is that it will show robust growth which will add up to close to 7 percent for the whole year.”

The CSO data, according to analysts, indicates that global financial crisis has hit the Indian economy far more severely than the Congress-led United Progressive Alliance (UPA) government had acknowledged. Sherman Chan, an economist at Moody’s Economy.com, said the data has “dismissed speculation that India is more resilient in this global turmoil because its economy is more domestically oriented.”

The growth is “almost certain” to be under 5 percent in the first half of 2009 and a recovery seems far from sight as the fiscal stimulus does not appear strong enough to foster a rebound, he added.

The “sharper than expected deceleration in December perhaps makes up for the slowdown that should have taken place in the September quarter,” Chan said. Describing the growth figure as “way below my pessimistic expectations,” Rupa Rege Nitsure, chief economist at the Bank of Baroda (Mumbai), said: “Whatever the government is doing is not going to be very effective as large scale demand stimulus across the world has not proved to be effective in restoring business confidence.”

The 5.3 percent growth is the slowest India has faced since the March quarter of 2003. With elections around the corner, the hard economic reality may prove politically expensive for parties in power, according to analysts.

The sharp downturn, according to Jehangir Aziz, chief economist for J.P. Morgan, “brings perception much closer to reality.”

“It brings home the fact that the downturn is going to be pretty strong. The sooner our expectations converge with reality, the sooner we will take action. And the sooner we take action, the quicker the recovery is going to be,” he added.

Hard facts revealed by CSO data show that agriculture, forestry and fishing activities shrank by 2.2 percent in contrast to the 6.9 percent growth the sector recorded the year before in the same period. Similarly, the manufacturing sector, which grew 8.6 percent a year ago, grew by 5 percent in the previous quarter.

The Indian rupee weakened to an all-time low of 50.77 against the dollar by Friday morning. The global meltdown has had its negative impact in the job sector too, with it falling by 50 percent even for graduates from the Indian Institutes of Management. There has been a sharp fall also in salaries on offer for these graduates.