Economic think-tank, National Council of Applied Economic Research (NCAER) has lowered its projection for Indian economic growth in current fiscal to 5.6 percent from 5.9 percent but projected it higher to 6.1 percent for the 2013-14. NCAER in its report on Quarterly Review of the Economy ‘based on quarterly model estimates, has said that its preliminary estimates show GDP growth in constant 2004-05 prices (to be) at 6.1 percent in 2013-14'.
As per NCAER report, economic slowdown is evident not only on the production side of the economy but also on the demand side. NCAER report estimates downward revision of GDP growth rate in the final two quarters, as compared to the previous estimate in October mainly due to contraction of output in all three sectors - agriculture, industry and services. The report further stated that lower agricultural output is explained by high deficit in rainfall, while, lower industrial and services output growth is a result of decline in growth and government expenditure.
NCAER’s report has highlighted that in the first half of 2012-13, the manufacturing sector alone declined steeply to 0.49 percent, which is a record decline and acts as a severe pull-down factor for the growth of GDP. While, the services sector has been slowing down and there are indications that the sector will register low growth in the current fiscal.
Further, the report also added that, the slowing down of consumption will negatively affect the growth in the current fiscal. The investment and private consumption were significantly contracted during the first half of the fiscal, while; the meager growth of investment will reduce growth both in the current and in the next fiscal, NCAER said in the review.
Elaborating the reasons for decline in private investment and consumption, it stated that, in the current fiscal, private investment is affected by high domestic interest structure and unsuitable business climate, while, the private expenditure is suffocated by persistent elevated inflation led by rising input cost.
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