India Posts Optimistic Economic Projections Despite Slowdown

India’s economy severely underperformed expectations over the past year, and has slowed considerably since 2008, but the government projected strong growth in the coming fiscal year.

The latest Economic Survey, published Wednesday by the government of India, addresses the country’s recent slowdown. “While India’s recent slowdown is partly rooted in external causes, domestic causes are also important,” the report said. Stimulus enacted after the global financial crisis of 2008 led to stronger growth in 2009 and 2010, the report said, but also boosted inflation. Then “monetary policy was tightened, even as external headwinds to growth increased. The consequent slowdown, especially in 2012-13, has been across the board, with no sector of the economy unaffected.”

Still, the report predicted that the global economy is “likely to recover somewhat in 2012,” boosting the outlook for the Indian economy in the coming fiscalyear, which begins on April 1, 2013.

Here are some highlights of the report:

The Indian economy is likely to grow between 6.1 percent and 6.7 percent in the coming fiscal year, up from 5 percent in the 2012 to 2013 fiscal year.

The fiscal deficit was contained to 5.3 percent of the gross domestic product in the year that ends this March, down from 5.8 in the previous year.

Wholesale Price Index inflation will shrink to 6.6 to 6.2 percent in the fiscal year 2013 -2014, down from 7.6 percent in 2012-2013.

Industry, which includes mining and quarrying, manufacturing, electricity, gas and water supply, and construction sectors, grew at a 3.5 percent the 2011-12 fiscal year and slowed to and 3.1 in the 2012-13 fiscal year.

Agriculture also slowed significantly, growing at a rate of 1.8 percent in 2012-2013, compared to 3.6 percent in the previous fiscal year. Slow growth in agriculture in the past year was attributed to a lower! -than-normal rainfall, especially in the initial phases of the south-west monsoon.

Manufacturing also dropped, growing at 1.9 percent in 2012-2013, compared to 2.7 percent in 2011-2012

Growth in the services sector slowed to 6.6 percent in 2012-2013, compared to 8.2 percent in 2011-2012. Within services, sectors slowed significantly included trade, hotels, restaurants, transport and communications. “Activities in this sector, being forms of derived demand, tend to grow at a slower rate with the slowdown of economic activity in the industry and agriculture sectors,” the report said.