|India growth set to slow further
India's economy will grow 6.7 percent in the current fiscal year, an advisory panel to the prime minister forecast, saying that an ongoing slowdown was of “great concern''.
India's gross domestic product expanded at near double-digit rate for much of the past decade but fell to 6.5 percent in the year to March, triggering fears that the country's rapid development was under threat.
“The growth rate in 2011-12 was low, it came down to 6.5 percent,'' C Rangarajan, chairman of the economic advisory council to Manmohan Singh, said in New Delhi.
“The decline in the growth rate is a matter of great concern to us. We expect the growth rate to be a shade better in the current fiscal [year].''
In recent years, the advisory panel's forecasts have proved to be rosier than real economic performance. In the latest figures, the panel's economic expansion forecast of 6.7 percent for the year to next March (2012/13) is higher than private economists who have predicted growth of about 5.5 percent, a 10-year low.
Analysts said the panel's revised forecast of 0.5 percent growth in the agriculture sector seemed hopeful.
“The estimates are pretty much in line with Reserve Bank of India's projections, but the growth number seems to be on the optimistic side on the assumption that agriculture growth won't be as slow as (the) market expects,'' said Rahul Bajoria, regional economist with Barclays in Singapore.
The council also forecast that inflation in the year to March 2013 would be between 6.5 and 7.0 percent, above the central bank target of about 5 percent, because of food price rises after a poor monsoon.
The growth forecast was in line with the prime minister's own predictions that the rate would narrowly exceed last year's 6.5 percent.
Opposition leaders and many independent economists have dismissed such figures as overly optimistic.
Ratings agency Moody's last week scaled down its growth outlook for Asia's third-largest economy to 5.5 percent for the year to March 2013.- AGENCIES