AP: Service sector growth nosedives in state

HYDERABAD: The Telangana unrest has severely affected the services sector in the state besides dragging the Gross State Domestic Product (GSDP) growth during April-June 2011. According to data sourced from the Directorate of Economics and Statistics, GSDP growth during the first quarter of 2011-12 fell to 8.49 per cent from 9.26 per cent in the same period the previous year.Similarly, services sector growth during the same period plunged from 24.99 per cent in the first quarter of 2010-11 to 8.57 per cent during Q1, FY12. “The reasons for the decline are several, including macroeconomic factors such as the global economic slowdown.But the political unrest in the state too has contributed to it. We anticipate that growth in the just-concluded second quarter will be equally bad.It might hit the industrial sector too,” a senior official from the Department of Industries & Commerce told Express. The services sector includes trade, hotels and restaurants, transport, communications, finance, insurance, real estate, business services, community, social and personal services. On the other hand, the industrial sector -- which includes mining and quarrying, manufacturing, electricity, gas and water supply and construction -- clocked an increase from 5.72 per cent in the first quarter of FY11 to 7.52 per cent in FY12.However, officials anticipate a fall in the growth rate in the second quarter.“The cumulative growth of mining and quarrying has fallen to single digits during the second quarter.Similarly, the growth of the manufacturing sector has been marginal,” the official explained. While mining and quarrying recorded a cumulative growth of 13 per cent in May 2011, it fell to 4.4 per cent and 4 per cent in June and July respectively.Likewise, manufacturing, which clocked 14.8 per cent in May, registered 14.4 per cent and 14.7 per cent in the succeeding months. Another cause for concern is the number of manufacturing groups slipping into negative growth.For instance, five of them posted negative growth in May 2011. The number increased to eight in July 2011. Some of the units posting negative growth include cotton textiles, basic chemicals and chemical products, basic metal and alloy industries, jute and other vegetable fibre textiles, wool, silk, man-made fibre textiles. Lastly, consumption of consumer durables and non-durables declined from 14 per cent and 21 per cent in June 2011 to 13.6 per cent and 7.6 per cent in July.