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This would be the slowest expansion growth in the last
three years according to the Finance minister P. Chidambaram who admits
that the lower growth was due to a slowdown in agriculture.
Agriculture is forecast to grow by 2.6% in the year to
end March, down from 3.8% in the previous financial year, the government's
statistics bureau said. However, growth remains strong in the country's
services, construction and communications sectors which are expected to
grow at 12.1%.
Despite the forecast of slower growth, India is still
the world's fastest growing major economy after China. But both China
and India are expected to slow slightly in the coming year as a severe
US downturn curtails demand for exports.
High Indian interest rates have also led to a stronger
rupee that could make the country's exports more expensive on world markets.
But spending by the country's emerging middle class of
50 million should help sustain growth.
India has become a centre for US and UK companies who
want to outsource services ranging from analyzing equity markets to handling
customer queries.
"I am reasonably confident that figures may be revised
and economy will grow at close to 9%," Mr Chidambaram said optimistically.
‘We are disappointed but not despondent,’ he added.
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