MUMBAI: India’s government said that the economy will likely register its slowest annual growth in a decade and expand just 5 percent in the fiscal year ending in March, citing official estimates released yesterday.
This is lower than an earlier forecast of 6.2 percent for the year, as the economy continues to be hit by weaknesses in the manufacturing, farming and services sectors, data from the Central Statistical Organisation (CSO) showed.
The projection comes a day after a report by the International Monetary Fund forecast India’s annual growth declining from 6.5 percent in 2011/12 to 5.4 percent in the 2012/13 financial year.
Analysts said the government estimate — which may undergo a revision by time the fiscal year ends — underscores the urgent need for more reforms to boost growth.
India’s finance ministry previously forecast the economy expanding by 5.7-5.9 percent for the current fiscal year while the Reserve Bank of India projected growth at 5.5 percent. “The numbers are disappointing,” the Prime Minister’s top economic adviser C Rangarajan said.
“But I believe that when the year is completed and more data available, the growth will be higher than what has now been estimated,” he added. The government expects manufacturing output to grow 1.9 percent this year against a 2.7 percent rise last year, the CSO data showed.
India’s economy has slowed sharply due to high interest rates, Europe’s debt crisis and sluggish investment caused by domestic and overseas concerns about policy-making and corruption. The government has introduced a series of measures since September to encourage foreign investment in key sectors and reduce subsidies, which have led to a ballooning fiscal deficit.
AFP
