Indian economic growth is expected to ease to a six-year low in the financial year 2008-09 on falling foreign and domestic demand amid economic slowdown.
Monday, a report released by the Central Statistical Office said GDP growth for the financial year 2008-09 is estimated at 7.1% compared to prior year's 9% growth. Economists were expecting an annual growth of 6.8%. In its advance estimates of national income, the statistical office said growth in manufacturing is seen at 4.1% in 2008-09, down from 8.2% in 2007-08. Construction is expected to expand 6.5%, slower than an annual 10.1% increase in the prior year. The agriculture, forestry and fishing sector is projected to grow 2.6%.
The estimated growth in GDP for the trade, hotels, and transport and communication sectors during 2008-09 was placed at 10.3% versus 12.4% last year. The financial service sector is estimated to rise 8.6% compared to 11.7% in 2007-08.
On the other hand, mining and quarrying growth is estimated to rise to 4.7% from 3.3%. In its Third Quarter Review of Monetary Policy 2008-09, the Reserve Bank of India lowered real GDP growth forecast for 2008-09 to 7% with a downward bias from 7.5%-8%. The central bank said the global crisis would dent India's growth trajectory as investments and exports slow.
In January, the central bank had slashed its repo rate and the reverse repo rate by 100 basis points each to 5.5% and 4%, respectively. The cumulative reduction in the CRR since mid-September 2008 was 400 basis points.
According to the CII M-ASCON Survey, one third of the manufacturing sub sectors out of 96 of them monitored by Confederation of Indian Industry have reported negative growth in production during the period April to December 2008 compared to April to December 2007. The worst hit sectors in terms of declining growth were castings, synthetic fibre, textile machinery, commercial vehicles, utility vehicles, etc.
The UPA government led by Prime Minister Manmohan Singh will present interim budget on February 16 as its five-year term ends in May. India will hold general elections in April and May.
Elsewhere, the Fitch Ratings affirmed India's Long-term foreign currency and local currency Issuer Default Ratings or IDRs at 'BBB-'. The outlook on the foreign currency IDR remained stable and that on the local currency IDR stayed negative.
The Fitch said the consolidated general government deficit would reach 9.5% of GDP in FY09, resulting in a slight increase in government debt to 77.9% of GDP. India's high fiscal deficit and government debt ratio are outliers among 'BBB' rated Sovereigns.
The rating agency forecasts Indian GDP growth of 5% in FY10, which would be the lowest annual growth rate since FY03. Further, fiscal stimulus and monetary easing are expected only to partially offset the slowdown in growth.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.