Amid a likely moderateness in industrial productivity, the administration turned down its GDP growth estimation for the existing financial year to 8.6% from the previous projection of around 9%.
The Finmin stated, “Growth is estimated to be marginally higher at 8.6 per cent this year over 2010-11 levels of 8.5 per cent.”
The finance ministry also said that as first quarter escalation figures for the existing financial year are still to be issued, the viewpoint for 2011-12 has to be inferred from movements of precedent facts, plus higher frequency proxy financial indicants.
While twelve-monthly indicators of real gross domestic product growth stayed optimistic in the existing financial year, there was a “perceptible slump” in terms of quarterly development rates during the past two quarters.
The financial system increased just 8.3% during the third quarterly period in 2010-11 and 7.8% during the January-March period, the lowest during the last five quarters.
“This apparent slowdown in headline year-on-year growth rates on a quarterly basis, plus of movement in other higher frequency indicators… and slowing automobile sales, suggested that growth outlook for 2011-12 may be lower,” it added.
While the Economic study had estimated GDP growth in 2011-12 at 9%, the central banking institution later lowered it to 8%.
The country’s economic system is approximated to have elaborated by 8.5% during the past financial.
The bureau stated that there is a slump in business investment and their earnings have been affected owing to cost appreciation of input items and raw material.
“Industry will probably slow, given trends in high frequency proxy indicators like Purchase Managers Index ( PMI )) and Index of Industrial Production ( IIP )) for the current fiscal (up to June, 2011)…,” it said.
But, it thought that the industrial slump may reverse once the base effect diminishes.
The industrial output growth rate declined to a 9-month low of 5.6% in the month of May because of a deprived presentation by the manufacturing and mining segments and lower offtake of capital goods.
According to the ministry, the agricultural expansion rate may moderate to 3-4% in 2011-12 as against 5% in 2010-11.