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India’s Growth Expected to Slow for Fiscal 2013
Aug 6, 2012 2:43 AM
By Dilipp S Nag
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RAPAPORT... India’s economic growth is expected to slow to around 6 percent to 6.3 percent in fiscal 2013, according to an ASSOCHAM survey of economists and industry leaders. Growth is being impacted by the a decrease in industrial growth and its impact on the service sector, lower-than-expected rainfall during the monsoon season, which has impacted the agriculture sector, and the weak global economic scenario.
India's gross domestic product (GDP) grew 6.5 percent in fiscal 2012, the lowest pace in nine years, according to government data. As business confidence has decreased in the first fiscal quarter that ended on June 30, ASSOCHAM expects that GDP is likely to fall below the 6.5 percent forecast set for the current year by the Reserve Bank of India.
The survey, which questioned 110 senior industry leaders and economists, cautioned that prospects for growth may deteriorate further if some of the policy issues implemented by the government are not redressed immediately. Almost 80 percent of the economists surveyed stressed that government needs to significantly raise its capital expenditures in order to boost investment.
The survey noted that the agricultural sector, which grew by about 2.5 percent in 2012, may not show any growth this year since sowing of the summer crops, the mainstay of the sector, has been by weakened by less rainfall.
The respondents stated that the industrial expansion could reach about 4 percent to 4.5 percent for the year, while the services sector -- the major contributor to GDP -- is also showing signs of weakness. Mining is at a near standstill due to an inadequate regulatory environment and manufacturing is also declining.
The survey noted that while India still has a large domestic market, the country’s external engagement represents more than half the size of the economy. “It is not only the merchandise exports, which are getting hit, but also the services exports which are directed toward the problem hit western economies,” said Rajkumar Dhoot, ASSOCHAM's president.
About 75 percent of participants surveyed said that the persisting euro zone problems and weakening growth in developing economies are weighing on global growth in 2012. ASSOCHAM said that global trade flows have slowed with tight credit conditions and the adverse impact of squeezing liquidity.
However, respondents pointed out that if immediate steps were taken to address the policy issues, which include addressing bottlenecks facing infrastructure projects and removing hurdles in the path of foreign direct investment, stronger growth would resume.
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Tags:
ASSOCHAM, Brazi, China, Dilipp S Nag, Economy, gdp, growth, India, Monsoon, Policy, Rajkumar Dhoot, Rapaport, RBI
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