Amid a likely moderation in industrial output, the Indian government lowered its GDP growth projection for 2011-12 to 8.6% from the earlier estimate of about 9%.

Finance ministry said that "Growth is estimated to be marginally higher at 8.6% this year over 2010-11 levels of 8.5%.”

The ministry added that as first quarter growth figures for the current fiscal are still to be released the outlook for 2011-12 has to be inferred from movements of past data, as well as higher frequency proxy economic indicators.

While annual indicators of real GDP growth remained positive in 2010-11, there was a perceptible slowdown in terms of quarterly growth rates in the last two quarters.

The economy grew by just 8.3% in the third quarter last fiscal and 7.8% in the January to March period, the lowest in five quarters.

It added that "This apparent slowdown in headline year-on-year growth rates on a quarterly basis, plus of movement in other higher frequency indicators... And slowing automobile sales, suggested that growth outlook for 2011-12 may be lower.”

While the Economic Survey had projected GDP expansion in FY'12 at 9% (plus, minus 0.25%), the Reserve Bank later lowered it to 8%.

The Indian economy is estimated to have expanded by 8.5% in the last fiscal.

The ministry said there is a slowdown in corporate investment and their profits have been affected due to cost escalation of input items and raw material.

(Sourced from PTI)