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Indian economy is expected to grow at 5 percent in FY13: Govt

25 Feb 2013 Evaluate

As per the government, Indian economy is expected to grow at 5 percent in 2012-13, lowest since 2003-04, on the back of slower growth in industry, agriculture and service sector. The parliament was informed on February, 23 in a written reply 'as per the Advance Estimates released by the Central Statistics Office, the growth rate of GDP (at factor cost at constant 2004-05) is estimated to be 5 percent in 2012-13. This growth rate is the lowest during the period 2003-04 to 2012-13'. 

Minister of State for Finance Namo Narain Meena said that the current economic slowdown is attributed to both domestic factors as well as the uncertain global economic environment. Among domestic factors, the tightening of monetary policy during most of 2011-12 in order to control inflation resulted in the slowing down of investment and growth, particularly in the industrial sector. While, global factors include euro-zone crisis and sluggish growth in several industrialised economies in 2012.

Regarding the slowdown in the industrial sector, he said that the performance of the industrial sector has been affected by both hardening of interest rates as well as moderation in external demand owing to uncertainty arising from global economic crisis. Further he said that deceleration in rate of credit flows, slowdown in consumer expenditure, infrastructure bottlenecks, high input costs, subdued business confidence have also contributed to the slowdown in industrial performance.

India's annual industrial output growth measured by index of industrial production (IIP), contracted by 0.6% at 179.3 for the month of December 2012 against contraction of 0.1%, later revised to -0.8%, in the previous month. The numbers were way lower than expectation of over 1% growth figure. The cumulative growth for the period April-December 2012-13 over the corresponding period of the previous year stands at 0.7%.

However, to revive the economy, the government has taken various steps include better access to finance for manufacturing sector, fast tracking of large investment projects in infrastructure, use of buffer stocks to moderate food inflation, strengthening of financial and banking sector, reducing the volatility of exchange rate. The government has also set up the Cabinet Committee on Investment (CCI) to expedite decisions on approvals and clearances for implementation of projects.  

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