“India forecast the weakest economic growth in a decade as subdued investment and elevated inflation add pressure on Prime Minister Manmohan Singh to extend policy changes and revive his development agenda.
Gross domestic product will rise 5 percent in the 12 months through March 2013, below last year’s 6.2 percent and the least since 4 percent in 2002-2003, a Central Statistical Office statement showed in New Delhi today. The median of 34 estimates in a Bloomberg News survey was 5.5 percent.
India faces inflation of more than 7 percent, one of the fastest levels in major emerging nations, limiting the extent the central bank can cut interest rates to spur expansion. The government has vowed spending curbs to damp price gains as it prepares to unveil the annual budget, part of a wider policy overhaul since September to lure capital inflows and ease bottlenecks by speeding up infrastructure projects.
“Putting out a number like this says that we need to get our act together,” said Vishnu Varathan, an economist at Mizuho Corporate Bank Ltd. in Singapore. India faces a modest recovery and the government needs to maintain the push to spur the economy, he said.
The rupee is up about 4 percent against the dollar since the policy changes began Sept. 13, while the BSE India Sensitive Index has risen 9 percent. The currency weakened 0.1 percent to 53.24 per dollar as of 1:47 p.m. in Mumbai. The stock index fell 0.3 percent. The yield on the 10-year bond maturing June 2022 dropped to 7.86 percent from 7.91 percent yesterday.
