Real GDP is expected to grow at 7.3% during 2012:
The prospect of buoyancy in the growth of the Indian economy which was expected during the beginning of the year began to fade by the middle of the year and currently remains clouded by heightened uncertainty.
Commenting on the economic outlook for 2012, Dr. Arun Singh, Sr. Economist, Dun & Bradstreet India (D&B India), “However, with 2011 mostly behind us, the performance of the Indian economy in some sense has been weaker than expected primarily owing to the high inflation, the significant hardening of interest rates, slump in investment, lack of policy reforms for a substantially long period and deteriorating consumer and business sentiment.
Further, the slowdown in the government demand, given the lower budgeted expenditure of the government during FY12 to adhere to its fiscal consolidation agenda, was not backed by the much required private investment demand to support growth. Moreover, the government finances remained strained during the year owing to rising subsidy bill (fuel, food) and lower revenue receipts (owing to moderation in the domestic growth).
Thus, currently the most worrying aspect is that while India`s economy was cushioned from the 2008 global crisis by the strong dose of fiscal and monetary stimulus, this time around there is no headroom to provide any stimulus-fiscal and monetary.“
Source: Dun & Bradstreet India