CMIE pegs down GDP growth to 7.9 per cent
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The Centre for Monitoring Indian Economy (CMIE) has revised the economic growth forecast for the current year downwards to 7.9 per cent from the earlier 8 per cent; which is above the majority view of 7.5 per cent.
"The decline in forecast is entirely because of scaling down for the industrial sector," CMIE said in its monthly review, adding that expected 7.9 per cent growth would be lower than the 8.5 per cent growth recorded in FY11.
The decline would be attributed to a sharp fall in the growth in agriculture-from a rather high 6.6 per cent to 2.9 per cent -- and the fall in the growth in industry from 7.9 to 7.5 per cent, the report said.
The Mumbai-based think tank said the industrial sector is expected to slow to 7.5 per cent, lower than earlier forecast of 7.8 per cent. Similarly, the manufacturing sector will grow by 7.5 per cent as against earlier estimate of 8 per cent, and growth forecast for mining sector has been revised from 4.8 per cent to 4.4 percent.
The decline in the growth expectation of manufacturing sector emanates from sharper-than-expected decline in growth in IIP in July and an expectation that the August IIP would also be weak, it said.
"We do expect a recovery in the second half of the year. However, the slower than expected growth in the first five months warranted the revision in forecast," the report said.
The agency expected a 2.9 per cent increase in the agricultural sector. The rainfall till September was good and the precipitation was 2 percent above the long period average. Kharif sowing was 3.1 per cent higher than previous season.
Of the earlier indicators of the services sector, the movement of freight on the Indian Railways during the first five months was higher by 6.1 per cent, compared to 2.3 per cent in the corresponding period a year ago. Cargo on the major ports was up by 4.5 per cent against 0.6 per cent.
"We expect the service sector to grow by 9.4 per cent in FY 12. This is the same level of growth as in FY 11. While we expect the growth in trade, transport, hotels, storage and communication to accelerate, we expect the financial sector to see a fall in the growth rate," report said.
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