India’s GDP expected to grow 7.1% in FY12, seen picking in FY13

Thursday, 23 February 2012 00:00 - - {{hitsCtrl.values.hits}}

Reuters: India’s economy is expected to pick up in the fiscal year starting on April 1 after growing at its slowest pace in three years in the current fiscal year, a government advisory panel said on Wednesday.

The panel said it expected the economy to grow by between 7.5 and 8 percent in the next financial year after growing 7.1 percent in the year that ends on March 31.

The forecast for the current fiscal year is slightly higher than the government’s official growth forecast of 6.9 percent issued earlier this month.

The economy has lost momentum as euro zone debt troubles coupled with high interest rates and policy paralysis at home have hit capital investment.

“By and large, the difficult situation on the external front must be taken into account while making any projection for the growth,” said C. Rangarajan, head of Prime Minister Manmohan Singh’s economic advisory council.

“The investment rate has been coming down since the crisis year (of 2008),” he added.

The advisers expect the farm sector to grow an annual 3 percent in the current fiscal year against the government’s official projection of 2.5 percent.

It expects construction activity to expand 6.2 percent compared with 4.8 percent estimated by the government.