The government’s mid-year economic review has pegged down the 2012-13 growth rate from above 7% to 5.7-5.9% — the lowest in a decade since 2002-03 — because of the crippling industrial slowdown.
The projection implies that the growth in GDP — the value of all final goods and services produced in a country during a particular period — for the second half of 2012-13 would be close to around 6%.
But the mid-year analysis, a government report-card tabled in Parliament on Monday sounded optimistic too. “There are, however, reasons to believe that the slowdown has bottomed out and the economy is headed towards a higher growth in the second half of 2012-13.”
Chief economic advisor Raghuram Rajan suggested a three-pronged strategy to halt the slowdown. “Further steps include a good confidence inducing budget, speeding up clearance for projects and further steps in capital market reforms.”
The growth in the IIP — a tool for measuring economic activity — jumped sharply in October. But analysts said the RBI’s decision on interest rate cut on Tuesday will be guided more by trends on the price front.