Indian economy seen cruising at 6.5% in ’10
The Economic Times, October 22, 2009, Page 1
Our Bureau NEW DELHI
AKEY economic think-tank has made the most optimistic official projection yet for growth in the fiscal to March 2010, flagged rising food prices as a major concern, and suggested
that tighter monetary and fiscal policies are unlikely in the coming months.
The Prime Minister’s Economic Advisory Council, headed by former RBI governor C Rangarajan, said it sees the gross domestic product (GDP) expanding by 6.5% in 2009-10 as Asia’s third-largest economy keeps a watchful eye on inflation and fiscal deficit while it emerges from a slowdown.
“(It is) unlikely that growth will be lower than 6.25%, but may reach 6.75%,” the panel said in its Economic Outlook for 2009-10 report to the prime minister on Tuesday.
RBI had in July forecast that India’s economy this fiscal would grow by 6%, with an upward bias, and the Planning Commission had said in early September that it sees GDP growth at 6.3%. India’s economy expanded by 6.7% in 2008-09 after growing at over 9% for three years.
The scaling up of growth forecasts is taking place amid strong recovery by the industrial sector, which grew at its fastest pace in 22 months in August, and expectations of a decline in agricultural output.
“In light of the recent resurgence in the non-farm sector, the 6.5% growth rate is quite feasible. The manufacturing sector is bouncing back as is evident from the IIP figures, and due to its strong correlation with the services sector, we can expect the latter to turn around as well,” Yes Bank chief economist Shubhada Rao said.
The improving trend is unlikely to prompt any immediate withdrawal of stimulus measures or a tightening of monetary policy, even though the panel made clear its concern about inflation and fiscal deterioration.
It expects the consolidated fiscal deficit of the Centre and states at 10.09% for 2009-10 and sees inflation, imported and local food inflation, as a significant risk for the Indian economy.
Wholesale price inflation could rise to 6% by the end of March 2010 from 0.92% for the week ended October 3. “The accommodative monetary policy will continue till March 2010,” Mr Rangarajan said at the event where the report was unveiled.
The Economic Times, October 22, 2009, Page 1
Our Bureau NEW DELHI
AKEY economic think-tank has made the most optimistic official projection yet for growth in the fiscal to March 2010, flagged rising food prices as a major concern, and suggested
that tighter monetary and fiscal policies are unlikely in the coming months.The Prime Minister’s Economic Advisory Council, headed by former RBI governor C Rangarajan, said it sees the gross domestic product (GDP) expanding by 6.5% in 2009-10 as Asia’s third-largest economy keeps a watchful eye on inflation and fiscal deficit while it emerges from a slowdown.
“(It is) unlikely that growth will be lower than 6.25%, but may reach 6.75%,” the panel said in its Economic Outlook for 2009-10 report to the prime minister on Tuesday.
RBI had in July forecast that India’s economy this fiscal would grow by 6%, with an upward bias, and the Planning Commission had said in early September that it sees GDP growth at 6.3%. India’s economy expanded by 6.7% in 2008-09 after growing at over 9% for three years.
The scaling up of growth forecasts is taking place amid strong recovery by the industrial sector, which grew at its fastest pace in 22 months in August, and expectations of a decline in agricultural output.
“In light of the recent resurgence in the non-farm sector, the 6.5% growth rate is quite feasible. The manufacturing sector is bouncing back as is evident from the IIP figures, and due to its strong correlation with the services sector, we can expect the latter to turn around as well,” Yes Bank chief economist Shubhada Rao said.
The improving trend is unlikely to prompt any immediate withdrawal of stimulus measures or a tightening of monetary policy, even though the panel made clear its concern about inflation and fiscal deterioration.
It expects the consolidated fiscal deficit of the Centre and states at 10.09% for 2009-10 and sees inflation, imported and local food inflation, as a significant risk for the Indian economy.
Wholesale price inflation could rise to 6% by the end of March 2010 from 0.92% for the week ended October 3. “The accommodative monetary policy will continue till March 2010,” Mr Rangarajan said at the event where the report was unveiled.
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