India's GDP (gross domestic product) for the first quarter (April-June, Q1FY12) is likely to grow at the slowest in the last six quarters, compounding worries for a government that is already battling high inflation. GDP is a yardstick of the country's economic health.
Analysts expect the economy to grow at 7.6 per cent in the first quarter of this fiscal (FY12), which will be slower than 7.8 per cent growth achieved in the last quarter (Q4 FY11). Indian economy grew at a robust 9.3 per cent in the first quarter last year (Q1 FY11).
A slowdown in manufacturing, which has the second largest contribution to the economy after the services sector, will weigh down on the first quarter GDP. High interest rates could hit financial services sector even though the services sector is likely to hold steady in the first quarter.
In his budget speech in February, Finance Minister Pranab Mukherjee had set a target of 9 per cent growth (plus minus 0.25 per cent) this fiscal. However, that projection was revised downwards to 8.2 per cent in August by the Prime Minister's Economic Advisory Council (PMEAC).
An unexpected slowdown in global economy - particularly the US and Europe, which are also two of India's biggest export markets, has led to a lot of concerns. But, rising inflation has been a bigger worry for the government. The RBI has raised key rates 11 times since March 2010 to rein in inflation, and that has resulted in slowdown in investment cycle.
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