India’s economic growth will hit 7.2 percent for the fiscal year ending next month, up from 6.7 percent the previous year, the government said yesterday.
The forecast suggests that India’s economic recovery is solidifying and gives the government space to begin withdrawing fiscal stimulus measures when it presents a new budget later this month.
“It’s a fairly strong number,” said Jyotinder Kaur, an economist at HDFC Bank. “The finance minister will have to take a harsher stand” on unwinding stimulus.
Still, the number came in below the Reserve Bank of India’s forecast of 7.5 percent growth and disappointed investors, sending the benchmark Sensex index down 1.8 percent, to 15,652 points.
The Ministry of Statistics said strong growth in industry and services helped compensate for shrinking agricultural output, which was hit by widespread drought.
Agricultural output is likely to decline 0.2 percent for the fiscal year, against 1.6 percent growth last year, the ministry said.
Industrial growth, which has swung back faster than expected, is likely to be 8.2 percent for the year, and growth in services, like finance, real estate and hotels, should reach 8.7 percent, the ministry said.
Per capita income is expected to rise 5.4 percent in real terms, to 33,540 rupees (US$717).
The Reserve Bank of India had forecast 7.5 percent growth for the fiscal year, while the IMF predicted 6.75 percent growth.
From 2003 to 2008, India’s economic growth averaged 8.8 percent a year.
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