Indian economy likely to slow down, says OECD

The latest assessment comes amid concerns that spiralling inflation and hawkish monetary regime could hurt India's economic growth.

A grouping of mostly developed nations, OECD's observations are based on Composite Leading Indicators (CLIs), that provide early signals of turning points with regard to economic expansion and slowdown.

"The CLIs for Italy, Brazil and India are pointing to slowdowns in economic activity relative to trend," OECD said today.

The grouping notes that these indicators are pointing to some divergence in the pace of economic activity across major economies.

In March, CLI for India stood at 99.4 as compared to 99.7 in February. CLI for India has been marginally falling since November 2010.

Last week, Finance Minister Pranab Mukherjee had projected the Indian economy to expand 8 per cent in 2011-12, lower than the budgetary estimate of 9 per cent growth.
"If oil prices continue to rise, it would be difficult to achieve higher GDP. GDP may come down to 8 per cent from (the projected) 9 per cent," Mukherjee had said.

His comments came days after the Reserve Bank of India (RBI) pegged the economic growth at 8 per cent, citing high oil prices among other things as the reason for this moderation.

The Indian economy is expected to have expanded 8.6 per cent in 2010-11, after growing 8 per cent in 2009-10.

According to OECD, the latest CLIs indicate a "slower or stable pace of expansion" in most of the EU countries.

"The CLIs for Canada and China signal regained momentum in economic activity and the CLIs for the US, Germany and Russia continue pointing to expansion relative to trend," the grouping noted.

The member countries of OECD (Organisation for Economic Cooperation and Development) account for over 60 per cent of the world output.

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