Mumbai - The global economic crisis affects India. The third Asian economy is expected to grow only by 6.9% in 2011-12. That will be the slowest pace of expansion in tree years. In 2006 the growth was at the highest peak of 9.6%.
The economic growth was dragged down by sluggish industrial output and decline in the mining sector. This is the slowest pace of growth since 2008-09 global crisis which pushed down India's gross domestic product growth to 6.7%. After that period the economy recovered and grew 8.4% in 2010-11, but now is going down again.
The Indian economy, Asia's third largest, has been hit by stubborn high inflation, high interest rates, a slowing global economy and policy paralysis in the aftermath of a slew of scandals that emerged last year. Last Tuesday's 21th CSO data showed that the key farm sector is estimated to grow by 2.5% in 2011-12, lower than the 7% posted in the previous year and below policy makers' expectation.
The mining and quarrying sector emerged as a laggard and is expected to decline by 2.2% in 2011-12, compared to a growth of 5% in the previous year. The sector has been hit by policy delays and implementation of projects.
The construction sector is estimated to grow 4.8% slower than the 8% registered in 2010-11. Overall, the service sector, which accounts for more than 55% of the economy, is expected to grow by 9.4% in 2011-12, nearly similar to the 9.3% growth on 2010-11.
Finance Minister Pranab Mukherjee said to The Times of India that though the advance estimates for GDP for the current fiscal year look somewhat disappointing, given the recent growth experience, the figures were not al all surprising considering the current global context and the slow down in the domestic industrial sector. The finance minister said he anticipated an upward revision in the GDP numbers when the full data for 2011-12 becomes available.