India’s economy will grow at the slowest pace in a decade in the current fiscal year, according to forecasts by the Finance Ministry, which predicts inflation will slow enough to allow interest-rate cuts.
Asia’s third-largest economy will expand about 5.7 percent to 5.9 percent in the year through March, less than an earlier estimate of as much as 7.85 percent, the ministry said in a mid- year review presented in Parliament today. That would be the smallest gain since the year ended March 31, 2003, when gross domestic product grew 4 percent.
To revive confidence in an economy with one of Asia’s worst performing currencies this year, Prime Minister Manmohan Singh in recent months allowed more foreign investment in retail, curbed energy subsidies and set up a panel to accelerate infrastructure projects. He also approved changes to a century- old land law to help curb often violent protests that have stalled projects.
“We cannot be satisfied with this rate of growth,” Raghuram Rajan, chief economic adviser in the ministry of finance, told reporters in New Delhi today. The government will take more steps to boost growth, including “a good confidence- inducing budget, speeding up clearance for the projects through the new cabinet committee and further steps in capital market reforms.”