India's economic growth slowdown could be worse than expected, shave a 1% off Chidambaram f'cast
The central bank's forecast for the year had been 5.5 percent, while Finance Minister P. Chidambaram had projected growth of 5.9 percent, but both appear to have been over-optimisic.
"Five percent GDP growth for the full year is more in tune with reality. The industrial sector downturn has extended beyond anyone's expectation," said Rupa Rege Nitsure, chief economist, Bank of Baroda, Mumbai.
The data will pile pressure on Prime Minister Manmohan Singh's Congress-led government to unveil a growth-oriented budget on Feb. 28 for the next fiscal year, beginning in April.
Unfortunately for Singh, with a national election looming in 2014, his government can ill-afford to indulge in populist schemes and expensive projects that would handicap efforts to lower a fiscal deficit targeted at 5.3 percent of GDP this year.
The government's advance estimate for the fiscal year 2012/13 shows that farm output is expected to grow 1.8 percent, while the manufacturing sector is likely to grow 1.9 percent.
According to Thursday's data, capital investment is expected to slow down to an annual 2.48 percent in 2012/13 from 4.39 percent in the previous year
Structural bottlenecks have restricted India's growth potential to around 7 percent, according to the central bank, ruining the aspirations India has for near double-digit expansion needed to provide jobs for a burgeoning