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ADB cuts India growth forecast for 2012-13

Source : BUSINESS_STANDARD
Last Updated: Fri, Dec 07, 2012 21:01 hrs

pOn Friday the Asian Development Bank ADB cut its projection for India&rsquos economic growth for the current financial year &mdashthe third occasion it has done so this year &mdash to 54 per cent from the 56 per cent estimated earlier A weaker than expected growth rate of 53 per cent in the second quarter among other factors prompted the Manila-based institution to do sopp&ldquoIndia&rsquos economy continued to show weakness Anaemic industrial production as well as consumption and investment point to sluggish growth in the coming quarters&rdquo it said in its Supplement to the Asian Development Outlook ADO 2012 released on FridayppBoth the 56 per cent and 54 per cent growth rates would be the lowest for India in a decadebr br table cellpadding2 width301 tbody tr styleheight 15pt height20 td stylemso-ignore colspan width273 bgcolor95acb3 colspan2 height40font faceTahoma colorffffff size2strongUPS & DOWNSstrongbr fontfont faceTahoma colorffffff size1Latest GDP growth estimates for &lsquo12-13fontspan stylemso-spacerun yesfont faceTahoma colorffffff size1 fontfont faceTahoma colorffffff size2                   fontspanfont faceTahoma colorffffff size2fonttd tr tr styleheight 15pt height20 td styleheight 15pt width149 bgcolorccd7dd height20font faceTahoma size2ADBfonttd td classxl65 alignright width150 bgcolorccd7ddfont faceTahoma size2540fonttd tr tr styleheight 15pt height20 td styleheight 15pt width149 bgcolorccd7dd height20font faceTahoma size2S&Pfonttd td classxl65 alignright width150 bgcolorccd7ddfont faceTahoma size2550fonttd tr tr styleheight 15pt height20 td styleheight 15pt width149 bgcolorccd7dd height20font faceTahoma size2RBIfonttd td classxl65 alignright width150 bgcolorccd7ddfont faceTahoma size2580fonttd tr tr styleheight 15pt height20 td styleheight 15pt width149 bgcolorccd7dd height20font faceTahoma size2Fitchfonttd td classxl65 alignright width150 bgcolorccd7ddfont faceTahoma size2550fonttd tr tr styleheight 15pt height20 td styleheight 15pt width149 bgcolorccd7dd height20font faceTahoma size2Moody&rsquos Analyticsfonttd td classxl65 alignright width150 bgcolorccd7ddfont faceTahoma size2550fonttd tr tr styleheight 15pt height20 td styleheight 15pt width149 bgcolorccd7dd height20font faceTahoma size2Morgan Stanleyfonttd td classxl65 alignright width150 bgcolorccd7ddfont faceTahoma size2580fonttd tr tr styleheight 15pt height20 td styleheight 15pt width149 bgcolorccd7dd height20font faceTahoma size2CRISILfonttd td classxl65 alignright width150 bgcolorccd7ddfont faceTahoma size2550fonttd tr tr styleheight 15pt height20 td styleheight 15pt width149 bgcolorccd7dd height20font faceTahoma size2CLSAfonttd td classxl65 alignright width150 bgcolorccd7ddfont faceTahoma size2550fonttd tr tr styleheight 15pt height20 td styleheight 15pt width149 bgcolorccd7dd height20font faceTahoma size2Citifonttd td classxl65 alignright width150 bgcolorccd7ddfont faceTahoma size2540fonttd tr tr styleheight 15pt height20 td styleheight 15pt width149 bgcolorccd7dd height20font faceTahoma size2PMEACfonttd td classxl65 alignright width150 bgcolorccd7ddfont faceTahoma size2670fonttd tr tr styleheight 15pt height20 td styleheight 15pt width149 bgcolorccd7dd height20font faceTahoma size2Q1 GDPfonttd td classxl65 alignright width150 bgcolorccd7ddfont faceTahoma size2550fonttd tr tr styleheight 15pt height20 td styleheight 15pt width149 bgcolorccd7dd height20font faceTahoma size2Budget 2012-13span stylemso-spacerun yes spanfonttd td classxl65 alignright width150 bgcolorccd7ddfont faceTahoma size2760fonttd tr tr styleheight 15pt height20 td styleheight 15pt mso-ignore colspan width273 bgcolor95acb3 colspan2 height20emfont faceTahoma colorffffff size1Ministry of Financefontemtd tr tbodytableppADB also cut its growth projection for 2013 to 66 per cent from the earlier 67 per cent It felt a high fiscal deficit inflation and slow capital flows would make it difficult for the Reserve Bank of India RBI to cut rates Projections for China&rsquos growth rate on the other hand were retained at 77 per cent in 2012 and 81 per cent in 2013ppIndia&rsquos economy grew 54 per cent in the first half of the current financial year So ADB is basically not sensing any improvement in the second half If this proves correct the hopes of Indian authorities would be belied as they are expecting a gradual recovery in the second six months of 2012-13ppIn the ADO issued in April the ADB had projected India to grow at seven per cent this year It lowered this to 65 per cent in July and then to 56 per cent in the October update citing falling global demand and the impact of a delayed monsoon on agricultural productionppThe report said monetary policies adopted to combat domestic inflation continue to pressurise South Asian economiesppIn India RBI has persistently refused to cut the repo rate at which it lends to banks on the ground of inflation risks RBI is slated to issue a monetary policy review later this monthpp&ldquoMoreover the late and uneven monsoon will hurt agricultural production in India and Nepal&rdquo said ADB Agriculture and allied sectors grew just 12 per cent in the second quarter of this financial year against 31 in the corresponding period last yearppThe report said recent economic data suggest the economy remains sluggish The Index of Industrial Production fell 04 per cent in September after expanding a modest 23 per cent in Augustpp&ldquoThe September IIP contraction was below market expectations driven by a decline in manufacturing&rdquo said the bank ADB further said the July-September national accounts validate this weaknesspp&ldquoGDP growth dipped to 53 per cent in the second quarter of 2012-13 from 67 per cent in the same quarter during the previous fiscal year mainly due to poor output in the farm and manufacturing sectors&rdquop


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