India economic growth rate for 2012-13 will slump to 5%: government

Feb 07 2013, 17:08 IST
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India's economic growth rate is estimated to be at an annual 5.0 per cent in the 2012/13 fiscal year. India's economic growth rate is estimated to be at an annual 5.0 per cent in the 2012/13 fiscal year.
SummaryEstimate is the worst of all growth projections issued by the govt and the RBI.

be slightly better at 6.8 per cent, compared to 6 per cent in previous fiscal.

Overall, the 5 per cent growth in the advanced estimates is lower than what experts have been forecasting.

Yesterday, the International Monetary Fund (IMF) had said that the Indian economy would grow by 5.4 per cent in 2012-13, but should pick up to six per cent in next fiscal.

The Indian economy had expanded by 8.4 per cent in both 2010-11 and 2009-10, while growth in 2008-09 was 6.7 per cent.

The advance GDP estimates are released by the CSO before the end of a financial year to enable the government to formulate various estimates for inclusion in the Budget.

INSTANT VIEWS

The latest estimate is the worst of all growth projections issued by the government and the central bank.

COMMENTARY

SHUBHADA RAO, CHIEF ECONOMIST, YES BANK, MUMBAI:

"The imputed growth for second half FY13 is at 4.7 percent. In our opinion, it is likely to be revised upward.

The main reasons for this considerable slowdown is a sharp correction in services at 6.6 per cent, led by trade and finance. The base effect in Q4 is positive, despite which, the numbers are projected lower which implies sharp sequential worsening of economic activity.

We have been anticipating marginal improvement in Q4 on the back of a small pick up in investments."

UPASNA BHARDWAJ, ECONOMIST, ING VYSYA BANK, MUMBAI

"While the slowdown in overall GDP estimates have been widely expected, the slowdown in services, particularly the trade, hotels, transport, communication category has been sharper than anticipated.

Moreover, the sharp slowdown clearly points towards continued slack in consumption demand, which is expected to keep the core inflation under check going forward".

PHANI SEKHAR, FUND MANAGER, ANGEL BROKING, MUMBAI

"It might have small impact but would not impact much as this fiscal year is almost over. People are focusing on next fiscal year.

It'll be interesting to see when actual data comes if there is any structural driver that is lowering GDP numbers and whether rate cuts can prevent that."

A. PRASANNA, ECONOMIST, ICICI SECURITIES PRIMARY DEALERSHIP LTD, MUMBAI

"The estimate seems to be on the lower side. It is surprising that construction sector is estimated to slow sharply in the second half. There is some concern that the drastic slowdown in government spending could affect October-March GDP data.

Even then, I expect this advance estimate to be revised upwards. I think we will end up closer to RBI's estimate of 5.5 percent."

DARIUSZ KOWALCZYK, SENIOR

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