CMIE scales down GDP growth to 7.2%

The Centre for Monitoring Indian Economy today revised downwards its growth estimate marginally for the current fiscal to 7.2%.

"We expect real GDP growth to accelerate only at 7.2% in 2012-13...it is marginally revised downwards from the previous forecast of 7.3% growth," the CMIE said in a report.

The dip in growth estimate is due to revision in many individual sectors and lower than expected trade and credit offtake performance in the initial months of 2012-13, it said. CMIE said it expects coal production growth to slowdown to 6.8% for the fiscal from the earlier expectation of 8.3%. Consequently, it has also scaled down the electricity generation growth forecast to 10.8%, from 13.2% earlier.

The manufacturing sector growth is expected to slow down to 4.9 from 5.1% last year due to weak signals from forecasts on automobiles, steel and fertiliser industries growth, it said.

Official data released in May had pointed out to quarterly growth falling to a nine-year-low at 5.3% in the three months ending March while the same for financial year 2011-12 slipped to 6.5%, lower than the 6.7% clocked during peak of the credit crisis in 2008-09.

This had led to a rash of downward revisions if GDP growth by rating agencies, investment banks and development finance institutions, with some estimates pegging it as low at 5.3%.

The growth fall is being blamed on weak global conditions especially the issues being sorted out by the Euro Zone, a sharp fall in rupee and domestic factors like 'policy paralysis' which is affecting decision making, scams, fiscal imprudence and elevated interest rates due to high inflation.

Citing its estimates, the CMIE report released today said, "a closer look at the data for the above mentioned economic indicators reveals that the situation has not really deteriorated as the figures seem to suggest."