India projects growth at 4.9% as polls loom

A cashier counts Indian rupee currency notes inside a bank in Mumbai. --PHOTO: REUTERS
A cashier counts Indian rupee currency notes inside a bank in Mumbai. --PHOTO: REUTERS

NEW DELHI (AFP) - India on Friday forecast economic growth would rise to nearly five per cent this financial year from 4.5 per cent last year, despite monetary tightening that analysts have said will slow expansion.

The country's gross domestic product will expand 4.9 per cent in the fiscal year to March 2014 from last year's decade low of 4.5 per cent growth, the statistics ministry estimated.

The forecast came despite a string of increases in India's main lending rate aimed at slowing consumer price inflation at nearly 10 per cent and government spending cuts to tame a gaping fiscal deficit.

The forecast growth rate is well below the near double-digit rates India notched up during boom times and far from the economic turnaround the Congress-led government has been seeking, as it faces elections due by May.

The Congress-led government is seen heading for a crushing defeat, tainted by corruption scandals, policy paralysis, surging inflation and the economic slowdown.

The latest growth projection is down considerably from the 6.1-per cent-to-6.7-per cent expansion the government initially forecast for 2013-14 in its budget presented early last year.

Fuelling economic uncertainty has been a worry that the parliamentary elections could result in an unstable outcome with smaller regional parties holding divergent goals seizing the upper hand.

Many private economists expect India's growth this year to be in the low four-per cent range.

Finance Minister P. Chidambaram, who doubles as a government spokesman, said recently he did not think India would get a government with a "solid majority" in the elections.