New Delhi: India's economic growth is showing signs of slowdown and is likely to decelerate in the current financial year 2011-12 as compared to last financial year, but it is expected to remain close to the trend, the Reserve Bank of India (RBI) Monday said.
The central bank indicated that its tough anti-inflationary stance has taken a toll on growth.
"Inflation risks stay, while growth showed signs of moderation. On current reckoning, growth is likely to stay around trend growth of around 8%. However, downside risks have increased. Overall some moderation in growth is expected in 2011-12," the RBI said in the pre-quarterly review of its monetary policy 2011-12.
"Signs of moderation in growth have emerged lately. Sequentially growth had decelerated in each quarter of 2010-11, though it still remained close to the trend in the fourth quarter (January-March 2011)," it added.
The gross domestic product (GDP) in the fourth quarter was at 7.8% -- the lowest in the four quarters of last fiscal year - that significantly pulled down the overall growth rate at 8.5% in 2010-11.
India's economy showed some moderation during the first quarter (April-June) this year which was evident from deceleration in industrial output during April-May 2011 and in consumption of cement, steel and automobiles, the review said.
The manufacturing purchasing managers' index (PMI) also dropped to a nine-month low in June 2011 at 55.3, indicating a serious moderation in growth, the review added.
In the Monetary Policy Statement May 2011-12, the RBI projected GDP growth rate at around 8% with a 90% probability of falling in the 7.4%-8.5% range.
Recently, the Indian government scaled down the country's GDP growth rate to 8.6% from the earlier projection of around 9%.
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