GDP GROWTH RATE TO DROP TO 3-YEAR LOW OF 6.9 PER CENT IN 2011-12
India’s economic growth rate in the current fiscal is expected to fall to 6.9 percent, the lowest in the past three years and down from 8.4 percent recorded a year ago, mainly on account of poor performance of mining, agriculture and manufacturing sectors and factors like tight monetary policy, high commodity prices in the world market and global problems. Although the decline in growth rate has been described as disappointing by Finance Minister Pranab Mukherjee and others, the nation can take comfort from the fact the country will grow by about seven percent despite the crippling impact of the global financial problems on the domestic economy. The advance estimates of national income released by the Central Statistical Organisation (CSO) revealed that during 2011-13, the agriculture and allied activities were likely to record a growth rate of 2.5 percent, down from a robust growth of 7 percent a year ago. Manufacturing sector growth is also expected to drop down to 3.9 percent in the current fiscal from 7.6 percent last year. The CSO’s GDP growth projection is a tad lower than the 7 percent forecast made by the Reserve Bank of India in its quarterly monetary policy review last month. In its mid-year Economic Review, the government had also pegged growth at around 7.5 percent. The current estimate is a sharply lower than the 9 percent growth projection for 201112 made by the government in its preBudget survey in February last year. The latest GDP growth estimate of 6.9 percent for the entire fiscal means that the pace of economic expansion slowed in the second half of 2011-12, given that GDP growth in the AprilSeptember, 2011, period stood at 7.3 percent. According to the advance estimates, mining and quarrying is likely to witness a decline of 2.2 percent, compared to a growth of 5 percent a year ago. Growth in construction is also likely to slip to 4.8 percent in 2011-12, against an 8 percent in 2010-11. Furthermore, the finance, insurance, real estate and business services sectors are likely to grow by 9.1 percent this fiscal against 10.4 percent last fiscal. According to the data, growth in electricity, gas and water production is, however, likely to be better this year. During the current fiscal, the trade, hotel, transport and communication sectors are projected to grow by 11.2 percent, against 11.1 percent last fiscal.