RBI survey lowers growth outlook to 6%

RBI survey lowers growth outlook to 6%
The Hindu Business Line, October 27, 2009, Page 7

Our Bureau, Mumbai

The overall growth outlook has been impacted by the decline in agriculture output on account of the deficient monsoon, the Reserve Bank of India said in the second quarter review of Macroeconomic and Monetary Developments, released on Monday.

The RBI’s survey of professional forecasters has suggested a downward revision in the growth outlook for 2009-10 from 6.5 to 6 per cent.

Contrary to this, the RBI’s industrial outlook survey had indicated an expansion in the economy and projections of other domestic and international agencies had also pointed to an improvement in India’s growth outlook.

In the ninth round of survey of professional forecasters’ conducted by RBI in September 2009, the projection for sectoral growth rate for agriculture was revised downwards from 2.5 per cent to -1.4 per cent, whereas for industry the projection was revised upwards from 4.8 per cent to 6.3 per cent. For services, the forecasters suggest modest downward revision from 8.3 per cent to 8.1 per cent.

According to the survey, some factors that indicate a faster and sustained recovery in growth include visible signs of industrial recovery such as 5.8 per cent growth in IIP during April-August 2008 as against 3.3 per cent in same period last year, the infrastructure sector showing higher growth of 4.8 per cent in April-August 2009, revival in capital flows in the first half of 2009-10 after two consecutive quarters of net outflows in the second half of 2008-09 and significant recovery in the stock market.

Among the downside risks, listed by the survey, are deceleration in growth of private consumption and investment demand, deficient monsoon and drought like conditions in several parts of the country, deceleration in non-food credit growth, negative growth in non-oil imports and weak growth in capital good productions.