Manufacturing, Agriculture and Services Lower India's Growth Forecast to 5%

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Written by Richard Finlayson, Senior International Editor for Industrial Info resources (Sugar Land, Texas)--Running against previous forecasts, India's economic growth rate is now estimated to go down to a decade low of 5% in the 2012-13 fiscal year. The slowdown is attributed to the manufacturing, agriculture and services sectors. The country's central statistical organization (CSO) released the official estimate that the growth rate would decline from 6.2% in 2011-12.

CSO's advance estimate lowered the growth in agriculture and allied activities to 1.8% in 2013-13, compared with 3.6% in 2011-12. Manufacturing growth is also expected to drop to 1.9% from 2.7% last year.

The Finance Ministry said that the figures were based on data from April to November, and that efforts will continue to revive growth and deliver better results. The previous low of 4% was recorded in 2002-03. Since then, the Indian economy has been expanding at more than 6%, with the highest rate being 9.6% in 2006-07.

An HSBC survey noted that growth in India's manufacturing sector hit a three-month low in January, and this was primarily due to moderation in new orders and power outages during the month. But the bank said that to meet new orders, manufacturers still rely on a drawdown of stocks of finished goods, which should provide support for output growth in the coming month as stocks are replenished.

New orders received by manufacturers in India during January increased for the 46th successive month, mainly on account of stronger demand and improved product quality, although at a slower pace when compared with December.

Meanwhile, new export orders increased for the fifth consecutive month.

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