GDP growth seen dipping
India’s economy is expected to grow by 6.9% in 2011-12, the slowest pace of expansion in three years, dragged down by sluggish industrial growth and a decline in the mining sector. Data released by the Central Statistics Office showed that growth in 2011-12 is estimated to be a shade below the 7-7.5% being projected by policymakers and below the 9% estimated last year. This is the slowest pace of growth since the 2008-09 global crisis which pushed down India’s gross domestic product growth to 6.7%. But the economy recovered and grew 8.4% in 2010-11. The Indian economy, Asia’s third-largest, has been hit by stubbornly high inflation, high interest rates, a slowing global economy and policy paralysis in the aftermath of a slew of scandals that emerged last year. Tuesday’s CSO data showed that the key farm sector is estimated to grow by 2.5% in 2011-12, lower than the 7% posted in the previous year and below policymakers’ expectations. A slowdown in investments hurt manufacturing growth, which is expected to ease to 3.9% in 2011-12 compared to 7.6% in the previous year. The mining and quarrying sector emerged as a laggard and is expected to decline 2.2% in 2011-12 compared to a growth of 5% in the previous year. The sector has been hit hard by policy delays and implementation of projects. The construction sector is estimated to grow 4.8%, slower than the 8% registered in 2010-11. Overall, the services sector, which accounts for more than 55% of the economy, is expected to grow by 9.4% in 2011-12, nearly similar to the 9.3% growth in 2010-11. The finance minister said he anticipated an upward revision in the GDP numbers when the full data for 2011-12 becomes available. Some economists said they expected growth to pick up in the months ahead on the back of an improving policy scenario, slowing inflation and expectations of lower interest rates.