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India’s economic growth hits its lowest rate in a decade

in International Business

India’s economic growth hits its lowest rate in a decade

india's economyRecording an annual growth of 9% until two years ago, India’s economy grew at its slowest pace in a decade during the 2012-2013 financial year.

Owed to its sluggish manufacturing and service sector, the Indian economy grew by 5% over the year, after having grown at an annual pace of 4.8% in the January-to-March quarter.

The figures are in line with official estimates. In February, India lowered its growth forecast to 5% for the year, underlining the challenges it faced in reviving the sluggish economy.

Last month, Prime Minister Manmohan Singh said the current downturn was “temporary” and he was confident the country’s economy would bounce back to an “8% growth rate”.

However, the mood has remained pessimistic in the business community with industry leaders worried over high rates of inflation.

The figures have caused investors to keep away.

Annual capital investment growth slowed to 3.5% in the first three months of 2013, down from 4.5% year-on-year in the previous quarter.

Meanwhile, complex business regulations are often blamed for driving foreign companies away.

Foreign direct investment into India has fallen, while the amount of corporate money leaving the country is on the rise.

“The government needs to go all-out to turn around investment sentiment,” said Yes Bank chief economist Shubhada Rao.



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