India’s official estimates peg growth at 7.1 percent (Lead)

February 9th, 2009 - 4:28 pm ICT by IANS  

New Delhi, Feb 9 (IANS) The Indian economy is expected to log its lowest growth in six years, falling to 7.1 percent for the current fiscal, against 9 percent in the previous year, official projections of national income said Monday.

The estimates, compiled by the Central Statistical Organisation (CSO), said the growth for all the three main components of national income, namely agriculture, manufacturing and services, were expected to fall during the current fiscal.

The manufacturing growth has been pegged at 4.1 percent, against 8.2 percent, farm output is expected to expand 2.6 percent, as opposed to 4.9 percent, while services growth is estimated at 9.6 percent, against 10.9 percent.

“The advance estimates are based on anticipated level of agricultural and industrial production, analysis of budget estimates of government expenditure and performance of key sectors like, railways, transport other than railways, communication, banking and insurance, available so far,” the organisation said.

The only sectors expected to log higher growths are community services, which mainly constitutes the government’s revenue expenditure, up 9.3 percent, against 6.8 percent, and mining, up 4.7 percent, against 3.3 percent.

The per capita income, the organisation said, is also expected to expand 5.6 percent to Rs.25,661, against Rs.24,295 in the previous year, when it expanded by 7.6 percent.

Reacting to the projections, India’s Finance Secretary Arun Ramanathan and Planning Commission Deputy Chairman Montek Singh Ahluwalia said the projections were on expected lines and that the country’s growth story remained in tact.

“There is some soft of optimism. That’s what the numbers indicate,” Ramanathan said soon after the release of official estimates. “Indications are there,” he said, when asked if he now expected commercial banks to cut interest rates.

“It’s broadly what we have been saying. It’s not a surprise. It’s a pleasant outcome, a positive development,” said Planning Commission Deputy Chairman Montek Singh Ahluwalia. “This shows growth momentum during the year remains strong.”

The Reserve Bank of India (RBI) had also recently lowered its growth forecast for India’s gross domestic product (GDP) to 7 percent from 7.5-8 percent because of demand slowdown and the impact of the global meltdown on the country’s economy.

Leading think tanks, institutions and policymakers had also come out with their own projections of India’s growth in recent weeks but with one common thread - the expansion will be sharply lower than 9 percent logged last fiscal.

The International Monetary Fund (IMF) painted the gloomiest picture yet and put the growth at 5.1 percent for 2009, while the projection by the Economist Intelligence Unit (EIU), the think tank of the leading publication, was slightly higher at 5.6 percent.

The fresh data also came against the backdrop of India’s merchandise exports registered a decline in December for the third straight month, while industrial production also dropped in October for the first time in 15 years.

Reacting to the growth projections released by the CSO, Associated Chambers of Commerce and Industry (Assocham) said it remained optimistic that the Indian economy will expand close to 7 percent this fiscal.

“Barring a few stressed sectors, the Indian economy remains insulated from the adverse impact of slow down and its fundamental are still stronger as compared to other economies,” Assocham president Sajjan Jindal said.

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