Government pares down growth outlook to 7.7 percent (Lead)

August 13th, 2008 - 1:29 pm ICT by IANS  

A file-photo of Manmohan Singh

New Delhi, Aug 13 (IANS) The Indian economy is likely to grow at 7.7 percent in 2008-09, compared to 9 percent in the last fiscal, predicts the government’s economic outlook report released here Wednesday. The report, prepared by the Prime Minister’s Economic Advisory Council (EAC), also called for tight monetary measures to check spiralling inflation and the falling rate of growth across all sectors.

The EAC, headed by former Reserve Bank of India Governor C. Rangarajan, said growth in the manufacturing sector would dip to 7.2 percent from 8.8 percent last fiscal.

It said industry was likely to grow at 7.5 percent this fiscal, compared to 8.5 percent last fiscal, while agriculture would grow minimally at 2 percent, worse than the poor 4.5 percent growth recorded last fiscal.

The report, which was presented to Prime Minister Manmohan Singh, projected a sharp decline in foreign investment to $23.8 billion from $44.8 billion last fiscal.

The EAC report also predicted the services sector would grow 9.6 percent compared to 10.8 percent last fiscal.

The council attributed the slow growth in the current fiscal to a sharp rise in commodity inflation globally, tightening in the credit-equity market following the subprime crisis in the US, and general economic slowdown across the world.

It attributed the annual rate of inflation, which peaked at a 13-year high of 12.01 percent for the week ended July 26, to rising global commodity prices.

The EAC said “coordinated policy action can bring inflation down to 8-9 percent by March 2009”.

The council recommended a tight monetary stance to check inflation.

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