New Delhi: India’s economic growth slowed more sharply than earlier estimated in 2011-12 after expanding more than 9% in the year before.
Economic growth slowed down to 6.2% in the year ended March from the earlier estimate of 6.5%, according to revised data released by the Central Statistics Office. Growth in 2010-11 was revised upward to 9.3% from the earlier estimate of 8.4%.
However, economists said the downward revision of GDP data for the fiscal year is unlikely to have a positive impact on the growth rate in 2012-13, as the GDP at factor cost has gone up to Rs.52.4 trillion from the earlier estimate of Rs.52 trillion.
Standard Chartered head of India research Samiran Chakraborty said he’s not going to revise his growth projections for the current fiscal ending 31 March based on the revised GDP data released on Thursday.
Crisil chief economist D.K. Joshialso said he will stick to his growth projection of 5.5% for 2012-13. “If at all, everything remaining same, the revised GDP data may bring down the GDP growth rate in the current fiscal,” he said.
The downward revision in growth in 2011-12 was mostly because of the upward revision of the 2010-11 financial year data. GDP growth in 2009-10 has also been revised upward to 8.6% from the 8.4% estimated earlier.
In 2011-12, gross fixed capital formation slowed down to 30.6% of GDP from 31.7% in 2010-11, while the gross domestic savings rate slowed to 30.8% of GDP from 34% a year ago.
Joshi said the downward trend in savings and investment may have got accentuated in the current fiscal ending 31 March. “The downward pressure may have intensified in 2012-13,” he said.
The per capita income in real terms, at 2004-05 prices, is estimated at Rs.38,037 for 2011-12, registering an increase of 4.7% during the year, as against an increase of 7.2% during the previous year.
While electricity production and the trade and hotel sectors grew at a slower pace in 2011-12 than earlier estimated, agriculture and financial services grew at a faster clip. The upward revision in 2010-11 growth data was mostly due to higher growth registered by manufacturing, construction and the trade and hotel sectors.
CSO said in a statement that the estimates of GDP and other aggregates for 2009-10 and 2010-11 have been revised on account of the latest available data on agricultural production and industrial production, especially the Annual Survey of Industries 2010-11, government expenditure and also detailed and more comprehensive data available from various source agencies such as RBI and the State Directorate of Economics and Statistics.
The upward revision in GDP at market price for 2011-12, which is used to calculate the fiscal deficit, however, will lead to a downward revision of the fiscal deficit for the year from 5.9% of GDP estimated earlier to 5.8%.
Though the government had targeted fiscal deficit at 5.1% of GDP in the budget for 2012-13, finance minister P. Chidambaramlater revised it to a “more achievable” target of 5.3%.
Data released by the Controller General of Accounts (CGA) on Thursday showed the government has till December met 78.8% of its fiscal deficit target for the full fiscal year of 2012-13 as compared to 92.3% of the target in the previous fiscal year.
In the first nine months of the current fiscal to December, ministries have spent only 56.8% of their allocated fund under planned expenditure, compared with 62.7% during the same period a year ago, CGA data showed.
This indicates the government is significantly compressing its plan expenditure to meet the revised fiscal deficit target for the current fiscal year.