India's GDP is expected to grow by 5.0% YoY in FY2012-13 against 6.2% YoY in FY2011-12 - Microsec

During the current financial year, Indian economy is expected to grow by its slowest pace since FY2002-03. According to Central Statistical Organization's (CSO) estimates, Asia's third-largest economy is likely to grow by 5.0% YoY for the year ending March 31st, 2013 against 6.2% YoY last year. In FY2002-03, GDP had grown at 4.0% YoY rate. Since then the Indian economy has been expanding at over 6% YoY rate, the highest rate being 9.6% YoY in FY2006-07. In absolute terms, at constant prices, GDP for FY2012-13 is likely to attain a level of INR55,034,760 million compared with INR52,435,820 million in FY2011-12. GDP at current prices for the year FY2012-13 is likely to be at INR94,619,790 million, witnessing a growth rate of 13.3% over the GDP for the year FY2011-12 of INR83,534,950 million.

Today's estimate by CSO is drastically lower than what has been projected so far by the Government, Reserve Bank of India (RBI) and International Monetary Fund (IMF). In its Mid-Year Economic Review, the Government had estimated growth ranging from 5.7-5.9% YoY. The current estimate is also sharply lower than the 7.6% YoY growth projection made by the Government in Budget. RBI in its Third-Quarter Monetary Policy review, for FY2012-13, predicted 5.5 YoY growth for FY2012-13. The National Council for Applied Economic Research (NCAER) forecasted a GDP growth of 5.6% YoY for FY2012-13. IMF estimated 5.4% YoY growth for India for the current financial year.

Outlook: The latest estimate of 5.0% YoY growth for the entire fiscal means the pace of economic expansion has slowed sharply in the second half of FY2012-13 to as low as 4.7% YoY, given that GDP growth in the April-September period stood at 5.4% YoY. The main reasons for this considerable downturn in growth are slowdown in Services sector, particularly in Trade, Hotels, Transport and Communication category and also in the Construction sector which is estimated to slow sharply in the second half. Despite of that, we expect this Advance Estimate is likely to be revised upwards and end up closer to RBI's estimate of 5.5% YoY growth.

Source : Equity Bulls

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