New Delhi: Describing the 6.9 per cent growth projected for the current fiscal as disappointing, Finance Minister Pranab Mukherjee today said it was on account of a slowdown in industrial output and investment growth.
"Though figures of advance estimates for GDP for the current fiscal somewhat look disappointing by our recent growth experience, considering the current global context and the slowdown in the domestic industrial sector in particular, the growth performance is not all that surprising," Mukherjee said in a statement.
Earlier in the day, the Advanced Estimates released by the Central Statistical Organisation (CSO) said the economic growth is likely to fall to 6.9 per cent in 2011-12. The GDP would slow to a three-year low, against 8.4 per cent expansion in the last fiscal.
Mukherjee said although investor sentiments have improved in recent months, it is still an area of concern. Besides the government is also working towards fiscal consolidation and controlling inflation. "We shall have to give more focus on both reaching higher growth trajectory and at the same time to keep in mind that the inflation should continue to be in moderate range," he told reporters here.
He said the main reason for decline in the GDP growth is slowdown in industrial growth, in particular in investment growth, but exuded confidence that the growth figures could be revised upwards when the full data for year 2011-12 becomes available. "No doubt these are challenging tasks, but national and international environment has thrust upon challenges. We shall have to face these challenges collectively," he said.
Mukherjee said there have been some encouraging signs in the recent weeks on business sentiments, Rupee exchange rate, moderation in headline inflation, possibility of a bumper Rabi crop and continued strong performance of the service sector. These factors, he said, "should help in recovering the growth momentum". As per today`s data, manufacturing growth is expected to drop down to 3.9 per cent in this fiscal from 7.6 per cent last year. The CSO`s GDP growth projection is a tad lower than the 7 per cent forecast made by the Reserve Bank of India in its quarterly monetary policy review last month.
In its mid-year Economic Review, the government had pegged growth at around 7.5 per cent. The current estimate is sharply lower than the 9 per cent growth projection for 2011-12 made by the government in its pre-Budget survey in February last year. The latest GDP growth estimate of 6.9 per cent for the entire fiscal means the pace of economic expansion slowed in the second half of 2011-12, given that GDP growth in the April-September, 2011, period stood at 7.3 per cent.