RBI survey reduces GDP to 7.5% for 10 yrs

RBI survey reduces GDP to 7.5% for 10 yrs
The Times of India, May 15, 2009, Page 21

New Delhi: A Reserve Bankconducted survey on Thursday lowered India's growth rate projection to 7.5% per annum for the next 10 years, down from 8.8% estimated earlier. "For the next 10 years, GDP is expected to grow at 7.5%, revised downward from 8.8% in the last survey," RBI said releasing the results of Professional Forecasters' Survey.

The central bank has been conducting the survey on a quarterly basis on major macroeconomic indicators of medium-term economic developments since the quarter ended September 2007.

The survey, which cut the growth forecast for 2008-09 to 6.6% from 6.8% and the 2009-10 outlook to 5.7% from 6%, also gave median forecasts for quarters ahead. The fourth quarter of the last fiscal 2008-09 is expected to have grown at 5.5%, down from the earlier forecast of 6.2%, the survey comprising views of 17 professional forecasters said.

However, RBI said the results of the survey represent views of the respondent forecasters and in no way reflect the central bank's views or forecasts. The forecasters, on average, expect India to grow faster with each passing quarter, as they view growth of 5.3%, 5.6%, 6.2% and 6.5% for the four quarters of 2009-10, respectively.

Further, the survey revised its forecast for real GDP growth for the next five years to 7%, down from its earlier estimate of 7.7% reported in the last survey. Meanwhile, among other indicators, the survey expects negetive 1.4% WPI inflation in the first quarter of 2009-10, and 5% and 4.5% over the next five and 10 years, respectively. The professional forecasters expect CPI-IW inflation to be at 5.9% for the next five years and at 5% on an average over the next 10 years. PTI

‘There’s room to cut rates’

Bangalore: Making a case for further softening of interest rates, RBI governor D Subbarao on Thursday said banks still have room to cut lending rates. "I am a regulator and (am) not an owner of banks. I can't hazard any guess over the quantum of reduction the banks can do. But I feel there is scope for reduction in lending rates," he told reporters here.

Following reduction of repo and reverse repo rates by 25 basis points in April, several public and private sector banks have reduced lending and deposit rates. Referring to prospects of economic growth in the current fiscal, Subbarao reiterated the earlier position by saying that GDP was likely to grow by 6% in 2009-10. PTI