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Belying hopes of recovery, India’s economy is forecast to grow at five per cent during the current fiscal, the lowest in a decade.
The forecast, put out by the Central Statistics Office in its advance estimate on Thursday, is lower than the Reserve Bank of India's projection of 5.5 per cent for the current fiscal.
The CSO’s advance estimate is also lower than the 6.2 per cent GDP growth recorded in 2011-12. A weak third quarter economic growth performance — the data for which will be released on February 28 — is understood to have prompted the CSO to go in for a “below expectation” forecast.
The CSO expects a sharp fall in growth in agriculture, industry and services sector.
While the farm sector is projected to grow at 1.8 per cent (3.6 per cent achieved last year), industry is likely to grow 3.1 per cent (3.5 per cent). Services sector is estimated to see a growth of 6.6 per cent, a sharp decline over 8.2 per cent recorded in 2011-12.
However, the Finance Ministry expressed hope that India would end the year on a better note with the leading indicators having turned up after November last year.
It also sees some improvement in trade and transport sector growth, which could prove positive for the overall economic growth. This is only an advance estimate and the actual figure for growth is yet to be released, the Finance Ministry said in a statement soon after the CSO’s numbers were made public.
The Finance Ministry pointed out that CSO’s advance estimate was based on extrapolation of numbers till November 2012.
While the advance estimate is “no doubt” below expectations, the Finance Ministry is keeping a watch on the situation. “We have taken and will continue to take appropriate measures to revive growth,” the Finance Ministry statement added.
For 2011-12, the CSO had initially pegged the advance estimate at 6.9 per cent, but revised it downward to 6.5 per cent in May last year. It was further scaled down to 6.2 per cent few days ago.
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