India GDP May Grow 6.5 to 7% in FY10, Minister Says

India’s economy may grow at close to the slowest pace since 2003 for a second straight year as a global recession cuts overseas orders and domestic demand wanes, said Junior Industry Minister Ashwani Kumar. “The year 2009 is going to be a difficult year,” Kumar told reporter in New Delhi today. “The economy is likely to grow at 6.5 to 7 percent in the next fiscal year.” India’s $1.2 trillion economy is expected to expand 7 percent in the 12 months to March 2009, after recording average annual growth of more than 9 percent in the previous three years. Prime Minister Manmohan Singh, seeking re-election before May, may see his popularity erode as companies cut production and fire workers. India’s exports fell for a second month in November and industrial output contracted for the first time in 15 years in the previous month. “We propose to boost infrastructure spending significantly in the next few months and the stimulus measures announced will begin to show impact in the next 6 to 7 months,” Kumar said. To spur growth, India’s government on Jan. 2 unveiled a second stimulus package to inject capital into banks and allow overseas investors to double purchases of debt. On the same day, the central bank cut interest rates for the fourth time in less than three months. “These measures are aimed to minimizing the pain in the next year and our effort will be prevent job losses as much as possible,” Kumar said. Indian exporters may cut as many as 10 million jobs by March, a lobby group said yesterday, putting pressure on Prime Minister Singh to cut taxes and protect the industry from the global recession. Kumar rubbished the claim and said the “job loss estimate is not at all realistic.”