New Delhi, Mar 15 (ANI): The Economic Survey for fiscal 2011-12 which was presented by Union Finance Minister Pranab Mukherjee on Thursday has estimated the Indian economy to grow by 6.9 percent in 2011-12 mainly due to weakening industrial growth.
The Economic Survey for 2011-12, however, predicts 7.6 percent GDP growth in 2012-13 and 8.6 percent in 2013-14.
This indicates a slowdown compared not just to the previous two years, when the economy grew by 8.4 percent, but also from 2003 to 2011, except 2008-09 economic downturn, when the growth rate was 6.7 percent.
With agriculture and services continuing to perform well, the survey has attributed the slowdown attributed almost entirely to weakening industrial growth. The services sector continues to be a star performer as its share in GDP has climbed from 58 percent in 2010-11 to 59 percent in 2011-12 with a growth rate of 9.4 percent.
Similarly, agriculture and allied sectors are estimated to achieve a growth rate of 2.5 percent in 2011-12 with foodgrains production likely to cross 250.42 million tonnes owing to increase in the production of rice in some States. The industrial sector has performed poorly, retreating to a 27 percent share of the GDP. Overall growth during April-December 2011 reached 3.6 percent compared to 8.3 percent in the corresponding period of the previous year.
The Survey points out that inflation as measured by the wholesale price index (WPI) was high during most of the current fiscal year, though by year end there has been a clear slowdown in price rise. Food inflation, in particular, has come down significantly, with most of the remaining WPI inflation being driven by non-food manufacturing products.
Monetary policy was tightened by the Reserve Bank of India (RBI) to control inflation and curb inflationary expectations. The growth rate of investment in the economy is estimated to have registered a significant decline during the current year.
The year witnessed a sharp increase in interest rates that resulted in higher costs of borrowings; and other rising costs affecting profitability and, thereby, internal accruals that could be used to finance investment.
But despite the low growth figure of 6.9 percent, the Survey has continue put India to be one of the fastest growing economies of the world as all major countries including the fast growing emerging economies are seeing a significant slowdown.
The Survey, while putting a large part of the reason for the slowing of the Indian economy to global factors, it has also attributed domestic factors for playing similar role. Among these are the tightening of monetary policy owing to high and persistent headline inflation and slowing investment and industrial activity.
The Economic Survey suggests that the progressive deregulation of interest rates on savings accounts will help raise financial savings and improve transmission of monetary policy. Other key areas include the deepening of domestic financial markets, especially corporate bond market and attracting longer-term inflows from abroad. Efforts at attracting dedicated infrastructure funds have begun. India's foreign trade performance will remain a key driver of growth.
The Survey has recognized sustainable development and climate change as becoming central areas of global concern and India too being equally concerned and engaged constructively in global negotiations.
Climate change challenges ahead are large and India is doing more than its fair share in reducing its energy-intensity of growth. (ANI)
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