CMIE pegs GDP growth at 7% for FY12

The Centre for Monitoring Indian Economy (CMIE) has estimated FY12 GDP growth to be 7%, a notch above the government's own advance estimate of 6.9%, and has said it will improve next fiscal.

While the GDP growth will be the slowest in three years at 7% for 2011-12, it will be 7.7% in the next fiscal, CMIE said in its February review of the economy.

The report said the GDP, which expanded by a healthy 7.3% in the first half of the fiscal till September, 2011, is expected to grow by only 6.8% in the second half due to both domestic and global issues.

On the domestic front, the report points out impact of drop in mining sector output because of bans in Karnataka and Goa, fall in production from Reliance Industries KG-D6 basin, and drop in coal supply.

As a result, growth in manufacturing sector is expected to moderate to 4.9%, it said, adding exports are also expected to fall in the second half.

The banking and financial services sector growth will moderate to 8.8% from 10.4% of year ago on account of lower growth in credit offtake and higher cost of deposits, it said.

The Finance Ministry, which had pegged FY12 growth at 9% in the budget, has been forced to revise the estimate repeatedly over the fiscal, and in the data released earlier this month, it estimated GDP growth at 6.9%.