CMIE trims FY13 growth forecast to 6.3%

"We expect real GDP to grow by 6.3% during 2012-13. This is a downward revision from our previous forecast of 6.7% growth," CMIE said in its monthly review of the Indian economy released here.

A change in forecast for manufacturing sector and the consequent fall in the growth of the services sector prompted the revision, the think-tank said.

Government data released last month said India's economy grew 5.5% during the first quarter ended June.

Industry grew 3.6%, agriculture 2.9% and services sector by a relatively slower 6.9%.

The city-based research outfit joins a growing list of rating agencies and economists who believe GDP growth of Asia's third-largest economy will slip in the current fiscal.

The RBI has revised growth projection down to 6.5% while the Prime Minister's Economic Advisory Council's latest report has pegged it at 6.7% as against the budgeted target of 7.3%. Lowest among the projections
are at 5.1%, made by a foreign brokerage house.

The fall in growth is being blamed on weak global conditions, especially debt crisis in eurozone, a sharp fall in rupee and a host of domestic factors.

These include 'policy paralysis' which is affecting decision-making and high interest rates due to rise in inflation.

CMIE has downwardly revised its estimate for growth in manufacturing sector, which grew 2.5% in FY12, to 3.2% for the fiscal from the previous 3.7%.

The slowdown in manufacturing is already starting to have a drag on services. The services sector's 6.9% growth in the June quarter was the slowest quarterly growth in three years, CMIE said, adding this growth was dragged down by the mere 4% rise in trade, hotels, transport, storage
and communication segments.