GDP growth pegged at 6.7%

6.7% is the weakest GDP growth in the last six years, and way below the 9% recorded in 2007-08, it is still seen as healthy in light of the global crisis that has crimped exports as also domestic demand. On a quarter-on-quarter basis, GDP grew at 5.8% in the last quarter of 2008-09, which was widely expected to register a sharp slowdown. The data raised hopes the Indian economy could be already on the uptick, with fears of further contraction in the global economy fading and domestic demand showing resilience. Economists still believe RBI may cut policy rates by another 50 basis points. Commerce & industry minister Anand Sharma said on Friday that there are signs of industrial revival. RBI has pegged this year’s growth at 6%. After the release of Friday’s data, three banks—Morgan Stanley, Nomura and Kotak Mahindra Bank—revised upward their GDP forecasts for 2009-10 from below 5% to 6% or more.
Economists believe India would benefit substantially in terms of capital inflows as the pace of contraction in the world economy slows and investors look for returns.