GDP expected to grow 4.7 per cent in June quarter: poll

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India's economic growth virtually halved in two years to 5% in fiscal year that ended in March, the lowest level in a decade. India's economic growth virtually halved in two years to 5% in fiscal year that ended in March, the lowest level in a decade.
SummaryGrowth virtually halved in 2 yrs to 5% in fiscal year that ended in March, the lowest level in a decade.

flip-flops, high-profile tax disputes and numerous regulatory hurdles have stymied investments to a point where many firms find it easier to invest overseas than at home.

"India's fundamentals have deteriorated steadily under the missteps of Singh, his aides and the central bank," Morgan Stanley said in a research note on Wednesday.

Singh and Chidambaram over the past year cut budget busting fuel subsidies, sped up the clearances for infrastructure projects and relaxed rules for foreign investments into a swathe of industries. But most analysts view their actions so far as too little, too late.

Dismal earnings from India's heavily indebted corporates suggest consumer demand is weak. Manufacturing activity has virtually stagnated, hitting merchandise exports and widening the trade deficit.

At nearly $90 billion India's current account deficit is the third largest in the world. Chidambaram has pledged to narrow it to $70 billion this fiscal year.

Exports might benefit from the rupee's descent, but it will exacerbate the oil import bill, increase fuel subsidy costs and pump up inflation. It appears to be a vicious circle.

The rupee could recover if growth attracted investment, but the trends are going the wrong way, with the June quarter expected to mark a third consecutive quarter below five per cent.

"Expectations about economic growth are already rock bottom. But if the GDP data undershoots them, it could prompt more weakness in the rupee," said Mark Williams, chief Asia economist at Capital Economics in London.

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