RBI blames external factors for slowdown

The Reserve Bank has attributed decline in the economic growth rate to three-year low of 6.9 per cent in 2011-12 largely to deterioration in the external environment.

“Recent data indicate that after a smart recovery during 2009-10 and 2010-11, real GDP growth slipped sharply to 6.9 per cent during 2011-12 largely on account of the deterioration in the external environment and the slowdown in domestic investment,” Reserve Bank of India (RBI) said in its monthly bulletin released on Monday.

The external factors that influenced the performance of the economies of the world include euro zone sovereign debt crisis and rising prices of commodities, it said. According to the Central Statistical Organisation (CSO), India’s growth rate is estimated to slip to 6.9 per cent in 2011-12 from 8.4 per cent in the preceding two years.

The fiscal also witnessed “loss of momentum in overall activity”, the report said, but added India has done well as compared to several other countries. “Notwithstanding the recent slowdown, the rate of growth of the Indian economy remained quite impressive in a cross-country context,” the report added.

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