In a clear signal, that India's economic growth is slowing, the Prime Minister’s panel on economy has downgraded the country's GDP from the estimated 8.5 per cent to 8.2 per cent. That would be lesser than last year's growth of 8.5 per cent.
The projected figures were given by C Rangarajan, who heads the PM’s Economic Advisory Council (PMEAC). Mr Rangarajan said, "The projected growth rate is lower than last year but respectable in the light of current economic situations."
The PMEAC's projection for 2011-12 is higher than the 8 per cent growth forecast made by the Reserve Bank in its annual monetary policy, but it is lower than the government's target of 8.5 per cent.
The farm sector is likely to contribute 3 per cent to the GDP, industries are likely to contribute 7.1 per cent and the services sector is likely to contribute 10 per cent to FY12 GDP.
"All forecasts indicate that the developed countries will grow slowly in 2011...many developed countries have revised growth estimates downwards," Mr Rangarajan said.
The inflation rate is expected to remain high at 9 per cent till October, but the Council expects inflation to cool down to 6.5 per cent by March 2012. That is less than the RBI's target of 7 per cent inflation in March.
Hinting at further interest rate hikes, the PMEAC also said the RBI would have to continue with its monetary tightening policy measures to contain inflation.
The RBI has already hiked benchmark rates 12 times since March, 2010, as part of efforts to tame inflation.
Headline inflation has been above 9 per cent since December, 2010.
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