CMIE Scales Down India's FY12 GDP Growth To 7

2011-10-17 14:59:12

The Centre for Monitoring Indian Economy or CMIE in its monthly review has revised India's economic growth forecast for the current fiscal year downwards to 7.9 percent from the earlier 8 percent, due to a sharp fall in the growth in agriculture-from a rather high 6.6 percent to 2.9 percent, and the fall in the growth in industry from 7.9 to 7.5 percent

However, the expected 7.9 percent growth would be lower than the 8.5 percent growth recorded in FY11.

The Mumbai-based think tank said the industrial sector is expected to slow to 7.5 percent, lower than earlier forecast of 7.8 percent. Similarly, the manufacturing sector will grow by 7.5 percent, compared to the earlier estimate of 8 percent, and growth forecast for mining sector has been revised from 4.8 percent to 4.4 percent.

The decline in the growth expectation of manufacturing sector emanates from sharper-than-expected decline in growth in IIP in July and an expectation that the August IIP would also be weak, it said.

"We do expect a recovery in the second half of the year. However, the slower than expected growth in the first five months warranted the revision in forecast," the report said.

The agency expected a 2.9 per cent increase in the agricultural sector. The rainfall till September was good and the precipitation was 2 percent above the long period average. Kharif sowing was 3.1 per cent higher than previous season.

Of the earlier indicators of the services sector, the movement of freight on the Indian Railways during the first five months was higher by 6.1 percent, compared to 2.3 percent in the corresponding period a year ago. Cargo on the major ports was up by 4.5 percent from the 0.6 percent.

"We expect the service sector to grow by 9.4 percent in FY12, flat with last year. While we expect the growth in trade, transport, hotels, storage and communication to accelerate, we expect the financial sector to see a fall in the growth rate," the report added.