(MENAFN - AFP) India was expected Friday to report its slowest quarterly economic growth in three years of around 5.2 percent, but analysts are optimistic the picture will improve.
Asia's third-largest economy has been hit by high interest rates, Europe's debt crisis, and sluggish investment caused by domestic and overseas concerns about stagnant policy and corruption.
Economic growth likely slipped to around 5.2 percent in the second financial quarter to September from a year earlier, according to a poll of 18 economists by Dow Jones Newswires. The figures are due at 0530 GMT.
The economy grew at 5.5 percent on year in the first financial quarter.
But Goldman Sachs this week upgraded Indian shares in anticipation of a pick-up in growth and easing inflation that would give the central bank room to cut borrowing costs and spur the economy.
Goldman Sachs economist Tushar Poddar said he saw "an improving outlook" with growth climbing to 7.2 percent in 2014 from 5.4 percent in 2012.
He cited falling oil prices, growing domestic demand as incomes rise and economic reforms that could ease supply and infrastructure bottlenecks.
The Congress-led government agreed Thursday to a vote in parliament on the contentious issue of allowing supermarket foreign giants like Walmart to operate in India, a move that critics fear could close many small family-run stores.
The government's decision was an attempt to end a parliamentary stalemate and press ahead with its reform agenda that includes opening up the vast pensions and insurance sectors to greater investment from overseas.
The government is expected to win the vote on retail policy next week comfortably in the lower house but may face a tougher fight in the upper house.
While defeat would be a loss of face for the government, it would not be a vote of confidence and so would not lead to early elections.
"GDP growth this year will probably fall a little bit below 5.5 percent or thereabouts and it will start recovering in the fiscal year 2014," Atsi Sheth, senior analyst at global ratings agency Moody's, told the Economic Times.
While growth of above 5.0 percent would be the envy of much of the world, it is not enough for India which has been aiming for close to double-digit expansion as it seeks to reduce crushing poverty.
"For us, eight percent growth is not an aspiration but a necessity. India cannot afford to grow below eight percent," Finance Minister P. Chidambaram said.