The downward revision reflects the slowdown in mining, agriculture and manufacturing sectors.<\/p>\n
Only last week Prime Minister Manmohan Singh had re-stated government figures of 7%-7.5% growth. The figure for the 2010-11 year was 8.4%.<\/p>\n
Analysts say industry has been hit by frequent interest rate rises, designed to curb soaring inflation.<\/p>\n
Credit warning<\/p>\n
The new figures released by the government’s Central Statistical Organisation on Tuesday updated its December projections for 7.25%-7.75% growth to the end of March.<\/p>\n
Agriculture is now expected to grow at just 2.5%, compared with 7% the previous year, while manufacturing should grow at 3.9% (7.6%).<\/p>\n
Mining could actually decline – by 2.2% – combated with growth of 5% in 2010-11.<\/p>\n
Analysts point to global market uncertainty, particularly in the eurozone, and apparent policy paralysis in the Indian government as contributing to the slowdown.<\/p>\n
On Monday, ratings agency Standard and Poor’s warned there could be a downgrade in India’s investment-grade credit rating.<\/p>\n
Andrew Kenningham, of Capital Economics in London, told Reuters: “Growth prospects are not looking good by historical standards.”<\/p>\n
Planning Commission deputy chairman Montek Singh Ahluwalia told the Press Trust of India the new figures were “consistent with what we have been saying”.<\/p>\n
Inflation has proved a persistent problem. Interest rates have been raised 13 times since March 2010 in an effort to slow price increases.<\/p>\n
Despite the growth downgrade, the main Sensex stock exchange has continued to perform well – up nearly 15% this year – while the under-fire rupee has risen 8% on its 2011 close.<\/p>\n
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