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India's growth to slow down
By agencies
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Tuesday, 13 June 2006, 19:30 IST
MUMBAI: India's growth rate is likely to slow to 7.9 percent in the fiscal year to March 2007 from an earlier forecast of 8.0-8.25 percent as manufacturing output moderates and farm production dips, a government think tank today said.
The Center for Monitoring Indian Economy (CMIE) said in its monthly report it expected the services sector, which contributes a little more than 50 percent to gross domestic product, would be the key driver of India's growth.
It forecast services to expand 9.6 percent in 2006/07, compared with 10 percent a year earlier.
India's financial year runs from April to March and its economy has expanded at an average 8 percent in the past three years. It grew at an estimated 8.4 percent in 2005/06.
"We expect agricultural and allied activities to grow by 2.5 percent during 2006/07," CMIE said. "During 2005/06 its growth was better than anticipated at 3.9 percent. We expect manufacturing to grow at a robust rate of 8.5 percent against the higher growth of 9 percent in 2005/06."
Despite a lull in the monsoon, weather department officials expect normal rains this year. This would help crops, which mainly depend on the four-month monsoon for irrigation.
This would also boost rural incomes of 600 million Indians who live off the land, a major driver of consumption and so industrial output.