India lowers 2011-12 economic growth forecast to 6.9 per cent

Feb 7, 2012, 7:46 GMT

New Delhi - The government on Tuesday downgraded its estimate for India's economic growth this fiscal year, which ends March 31, to 6.9 per cent because of slowdowns in manufacturing and farming.

Gross domestic product (GDP) had risen 8.4 per cent in the previous fiscal year, and if the government's forecast holds true for this year, India would see its slowest growth rate in three years.

The government had started the fiscal year with a projection of nearly 9-per-cent GDP growth but has whittled it down through the year.

Experts attributed the slowdown to a shrinking of investment because of the global economic environment, the central bank's 13 interest rate hikes to tame inflation since March 2010 and the government's inability to push through policies that would open sectors like retail to foreign investors.

The advance estimate released by the Central Statistic Office said slow growth was expected in the manufacturing, agriculture and construction sectors while mining was expected to be in the negative.

After posting rapid economic growth of more than 9 per cent for three fiscal years running from 2005 to 2008, India's GDP growth dropped to 6.8 per cent in 2008-2009 largely due to the global financial crisis.

It recovered to post about 8-per-cent growth in 2009-2010.