India’s economy is expected to grow at 6.9 per cent in this financial year (2011-12), the slowest pace in three years, advance estimates released by the Central Statistical Organisation showed.

This would be far below the budget estimate of 8.5 per cent targeted for the financial year. Finance minister Pranab Mukerjee said the main reason for the decline was industrial growth and investment, in particular. Industrial output this year is estimated to grow just 3.9 per cent. The mining and quarrying sector is expected to shrink 2.2 per cent.

C Rangarajan, chairman of the prime minister's economic advisory council, however said: “The final number for growth is likely to be above 7 per cent.” Chief statistician TCA Anant endorsed his view. "Industrial output of the SME sector and changes in the base of IIP will be fully available by the end of the year,” he said. Therefore, there will be a slight upward revision that could push up GDP growth to over 7 per cent, he added.

The CSO estimates were based on projections of 2.5 per cent growth in farm output for the year.

But Mukerjee said the country was expected to have a bumper rabi crop and that could help an upward revision in GDP numbers. India is projected to have record farm output of 250 million tonne this year.

GDP growth for the first and second quarters of the year stood at 7.7 per cent and 6.9 per cent, respectively. In making the estimate, the CSO has projected higher inflation for the year than what the government has forecast. A broad measure of inflation, that includes services and is referred to as GDP deflator, has been estimated at 8.66 per cent. This is higher than the government’s estimate of 7 per cent WPI inflation by the end of March.