* India's economic growth seen at 4.9 pct in 2012/13 vs 4.5
pct a year ago
* Manufacturing seen contracting 0.2 pct v/s 1.1 pct growth
* Services seen growing at 6.9 pct v/s 7.0 pct
* Chidambaram likely to announce measures to boost
(Adds comment, detail)
By Manoj Kumar
NEW DELHI, Feb 7 India on Friday cut its
estimate of annual growth for the fiscal year to 4.9 percent
from 5 percent because of a contraction in the manufacturing and
The revision down will do little to help the Congress
party-led ruling alliance, which faces an uphill battle in a
general election due by May amid allegations of economic
mismanagement, corruption scams and high inflation.
Last week, the Statistics Ministry revised down economic
growth for the previous fiscal year to 4.5 percent - the slowest
pace during the decade Manmohan Singh has been prime minister -
from an earlier estimate of 5 percent.
Farm output is expected to grow 4.6 percent in the fiscal
year to March 31, against 1.4 percent growth a year ago, while
the manufacturing sector is seen contracting by 0.2 percent
compared with 1.1 percent growth in 2012/13, the Statistics
Ministry said in a statement.
Last year, Finance Minister P. Chidambaram had projected
gross domestic product (GDP) growth of 6.1-6.7 percent in
2013/14 in his annual budget, but lately lowered the estimates
to about 5 percent.
Chidambaram is widely expected to announce measures,
including a cut in factory gate duties on some products, to push
up manufacturing output when he presents an interim budget for
the coming fiscal year in parliament on Feb. 17.
The full-year budget will, however, be presented by the next
finance minister after the elections.
Asia's third-largest economy grew at 4.6 percent annually in
the first half of the current fiscal year, down from 5.3 percent
in the corresponding period a year ago.
The services sector, which contributes about 60 percent to
gross domestic product, is likely to grow at 6.9 percent in the
current fiscal year, compared with 7 percent growth a year ago,
the data showed.
The construction sector, contributing nearly 8 percent to
GDP, is estimated to grow at 1.7 percent from 1.1 percent a year
"The data shows that there is an overall slowdown in the
economy with construction being very weak together with
manufacturing," said Saugata Bhattacharya, chief economist at
"Going ahead, we expect GDP growth to definitely pick up to
around 5.2-5.3 percent depending on the policies of the next
government," he said.
Increases in interest rates by the Reserve Bank of India to
rein in near-double digit retail inflation - three times since
Raghuram Rajan took charge in September - have also dampened
chances of early economic recovery.
"Notwithstanding a favourable monsoon in 2013 and healthy
agricultural performance, the pickup in rural demand has been
uneven and weaker than expected," said Aditi Nayar, an economist
at ICRA, the Indian arm of rating agency Moody's.
The economy grew at more than 9 percent annually for three
straight years during the 2005/06 to 2007/08 period, before
being hit by the global financial crisis and high interest rates
amid a slower global recovery.
This year, the government has cleared hundreds of
much-delayed projects such as power plants, mines and ports, but
the impact is expected to be visible only in next year's growth
numbers, due to a time lag in actual investments.
Last week, the Reserve Bank of India in its quarterly review
said the weakening of private consumption and investment demand
had dampened prospects of a second-half pick-up in GDP growth.
Consumption, which contributes about 70 percent to the near
$1.8-trillion economy, is expected to grow 4.4 percent in fiscal
2013/14, down from 5.2 percent the previous year, the data
Indian makers of durable goods such as washing machines,
refrigerators and electronic items face a bad year, as output of
these goods contracted 12.6 percent during the period from April
Annual car sales declined by about 5 percent in the first
three quarters, hit by high inflation, fuel prices and interest
(Additional reporting by Rajesh Kumar Singh in NEW DELHI,
Suvashree Dey Choudhury in MUMBAI; Editing by Angus MacSwan and