India has lowered its growth forecast to 5% for this fiscal year, underlining the challenges it faces in reviving its sluggish economy.
The Central Statistical Organization estimated India’s economic growth will hit a decade low of 5% for the year to 31 March 2013 on account of weak performance in the country’s manufacturing, agriculture and services sector, reports The Hindu.
“The growth in GDP (gross domestic product) during 2012-13 is estimated at 5% as compared to a growth rate of 6.2% in 2011-2012,” according to the Advanced Estimates released on Thursday by the statistical office.
Last week, India’s central bank had cut its forecast to 5.5% from 5.8%.
Rupa Rege Nitsure, chief economist at the Bank of Baroda, said that the revised figure of 5% growth was “more in tune with reality”.
The CSO’s advance estimate lowered the growth in agriculture to 1.8% in 2012-13, compared to 3.6% in 2011-12. Manufacturing growth is also expected to drop to 1.9% in this fiscal, from 2.7% last year.
The services sector – including finance, insurance, real estate and business services sectors – is likely to grow by 8.6% this fiscal year, against 11.7% last fiscal year.
India’s economy grew at a slow pace of 5.3% from a year earlier in the July to September quarter, bogged down by overburdened infrastructure and heavy government regulation that has hampered the retail sector amid the global downturn.
On Wednesday, the International Monetary Fund had said that the Indian economy would grow by 5.4% in 2012-13, but should grow up to 6% in the next fiscal.