GDP for 2011-12 revised to nine-year low of 6.2%

India's economic growth rate has been revised downwards to a 9-year low of 6.2% for 2011-12 from the earlier estimate of 6.5%, as global turmoil and high interest rates choked investment and slowed factory output. The Central Statistics Office also revised the growth rates for 2010-11 and 2009-10 to 9.3% and 8.2% respectively from 8.4% each earlier.

As per the first revised estimates (RE) of National Income, Consumption Expenditure, Saving and Capital Formation, the GDP for the fiscal 2010-11, “GDP at factor cost at constant (2004-05) prices in 2011-12 is estimated at R52,43,582 crore as against R49,37,006 crore in 2010-11, registering a growth of 6.2% during the year as against a growth of 9.3% in the year 2010-11."

With the base year growth now being lower, the economic expansion in 2012-13 would statistically be a little better than forecast earlier. The government is due to release advance growth estimates for 2012-13 next Thursday.

What's worrying is the sharp decline in savings rate to an 8-year low of 30.8% of GDP in 2011-12 from 34% in the previous year and the fall in investment rate to 3-year low of 35% from 36.8% during the previous year. Private final consumption expenditure grew at a lower 16.2% in 2011-12 compared with 17.3% in the previous year. Thanks to the failure to rein in the fisc, government consumption expenditure grew 17% in 2011-12 as against 15.5% in 2010-11. In 2009-10, the year that

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