New Delhi : The government Tuesday said the Indian economy is expected to expand by 6.9 percent in the current fiscal — the slowest in three years as high interest rates, fragile global economic conditions and the government’s inability to push through key reforms stifled growth.
“The growth in gross domestic product (GDP) during 2011-12 is estimated at 6.9 percent as compared to the growth rate of 8.4 percent in 2010-11,” said the advanced estimates of national income released by the Ministry of Statistics and Programme Implementation here.
In the financial year 2009-10, the economy grew by 7.4 percent.
The Reserve Bank of India’s hawkish stance on interest rates has resulted in capital investments drying up, adding to the country’s woes amid sluggishness in the global economy.
Gross Fixed Capital Formation, an indicator of investments toward creating assets, grew at a slower rate to Rs.26,09,963 crore in 2011-12 as against Rs.23,31,382 crore in the previous financial year. Any weakening in this indicator signifies that the economy is slowing.
Among key sectors that slowed down in the year, ending March, are manufacturing, which is expected to expand by just 3.9 percent, while mining sector will see a negative growth of -2.2 percent.
According to the latest estimates available on the index of industrial production, the index of manufacturing registered growth rates of 4.1 percent during April-November of the current fiscal.
Agriculture too rose at a tardy pace of 2.5 percent, compared to the 7 percent growth shown in the previous fiscal.
Trade, hotels, transport and communication sectors are expected to grow by 11.2 percent, while financing, insurance, real estate and business services could grow by 9.1 percent.
The chairman of Prime Minister Manmohan Singh’s Economic Advisory Council, C. Rangarajan, however, said the final number for the country’s GDP growth for the fiscal year ending March is likely to be slightly higher than 7 percent.
Planning Commission Deputy Chairman Montek Singh Ahluwalia too agreed that economic growth could be around 7 percent once the final numbers come in.
“The 6.9 percent is consistent with what we have been saying. We said 7 percent for the year as whole. With 7.3 percent in the first half and 6.9 in the third quarter, 7 percent is possible,” said Ahluwalia.