GDP seen growing at decade-low 5%
Chidambaram, who has set for himself a target to reduce the Centre’s fiscal deficit to 5.3% for the current fiscal, had ordered spending cuts in welfare, defence and road projects. No wonder, according to the latest GDP estimate, growth in government expenditure is on track to moderate to about 4% in 2012-13 from 8.6% a year ago, while private consumption expansion has been forecast to halve to 4% in 2012-13 over the previous fiscal. Growth of gross fixed capital formation — a proxy for investment in the economy — is projected to fall to 2.48% in 2012-13 from 4.4% in 2011-12.
The CSO data showed that the economic slump could be deeper than anticipated, with across-the-board slowdown in sectors including agriculture, industry and services. Bond yields fell sharply on Thursday, in expectations of deep rate cuts from the RBI at its monetary policy review scheduled next month. The Stock markets largely ignored the GDP data, with the benchmark BSE Sensex ending down 0.30% at 19,580.32 points on Thursday. The government on Thursday successfully raised about Rs 11,400 crore through its disinvestment in NTPC — the largest stake sale in 2012-13. Analysts expect the government to contain the fiscal deficit at 5.3% by March-end, even as lower government spending could curb growth.
Growth in agriculture and allied activities has been pegged at 1.8% in 2012-13, compared with 3.6% 2011-12. Manufacturing growth is estimated at 1.9% in 2012-13, down from 2.7% in 2011-12. The finance, insurance, real estate & business services
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