CMIE, Goldman peg GDP growth at 5.8% for FY10

CMIE, Goldman peg GDP growth at 5.8% for FY10
The Financial Express, August 11, 2009, Page 2

Press Trust of India, Mumbai

Economic think-tank Centre for Monitoring Indian Economy (CMIE) on Monday revised downward country’s economic growth projection to 5.8% for the current fiscal as against the earlier estimates of 6.6% due to a poor monsoon even as global investment banking firm Goldman Sachs revised its estimates for FY11 to 7.8% from 6.6%— based on a better investment outlook and external environment and recovery in demand. It, however, kept the growth rate for current fiscal unchanged at 5.8%.

“We are raising our FY 11 GDP growth forecast significantly to 7.8% from 6.6% due to a much improved investment outlook, especially for infrastructure, a recovery in consumption demand, and a better external environment,” Goldman Sachs said. It also attributed this to several Indian companies raising capital through qualified institutional placements (QIPs).

Goldman Sachs has pegged inflation target for end of FY 10 at 6.5%, with risks firmly to the upside “We think inflationary pressures are building up. Food prices are rising, and we think will continue to rise due to the prospect of a significantly poor summer crop. Our end-March 2010 target for WPI inflation is at 6.5%,” Goldman Sachs said

CMIE blamed failure of monsoon particularly in the month of June and July for the lower projections. According to CMIE, economic activity is expected to pick up from September as a result growth will improve to 7.1% in the March quarter of 2010 from 4.7% in the June quarter.