India: GDP Estimate Down to 6.9% Growth

February 7th, 2012
in econ_news

Econintersect:  The advance estimate for GDP in the current fiscal year which has less than two months remaining has been adjusted sharply India-flagSMALLlower.  The estimate was released February 7 by the Central Statistical Organisation (CSO).   Less than a week ago the expectation was lowered to 7-7.5% after comments by Prime Minister Manmohan Singh on Friday February 3.  GDP growth in the previous fiscal year 2010-11 was 8.4%.  Especially hard hit segments of the economy are agriculture down to 2.5% growth from 7% last year, and manufacturing at 3.9% down from 7.6%.

Follow up:

The RBI (Reserve Bank of India) has been tightening monetary policy for much of the past two years to fight stubbornly high inflation which has shown signs recently of partial abatement. On January 25 the RBI made a surprise move in cutting the CRR (cash reserve requirement) for banks, the first monetary easing after the long tightening period. Declining GDP growth may occasion further easing action, especially if inflation continues to behave better.

A growth rate of 6.9% will make the current year the slowest of any year in the last nine except for 2008 (fiscal year ending March 31, 2009) when the world economy was decimated by the financial crisis.

India GDP 2002-2010

Graph from The World Bank.


Hat tip to Sanjeev Kulkarni.

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