Economists project 6.6% GDP growth in second quarter

Economists project 6.6% GDP growth in second quarter
The Financial Express, November 30, 2009, Page 17

Press Trust of India, New Delhi

The Prime Minister's economic advisory panel expects the economy to grow by around 6.1% in the second quarter, the same as in the preceding three months, due to the impact of a weak monsoon on agriculture.

However, other economists peg the growth rate in the range of 6.2-6.6% against a healthy 7.7% in the corresponding period last fiscal. The data for the second quarter gross domestic product (GDP) growth will be released on Monday by the Central Statistical Organisation.

“The second quarter may reflect to some extent the impact on agriculture. Therefore, the growth rate may not necessarily exceed very much over 6.1% which we saw in the first quarter...I think so, it will be around 6.1%," PM's Economic Advisory Council (PMEAC) chairman C Rangarajan said. If this happens, the PMEAC's projection of 6.5% growth rate in the current fiscal will require the economy to expand by around 7% in the second half of this fiscal. "We forecast 6.5% for the year as a whole... It will have to be around 7% (in the second half)," Rangarajan said.

He said industrial and services growth will be stronger in the second half and will make up for the impact of the weak monsoon on agriculture in the third quarter. However, HDFC Bank Economist Jyotinder Kaur said she expects the economy to grow by 6.6% in the second quarter mainly due to industrial growth. "But, agricultural growth is likely to shrink by 3.5-4%," she said.

With farm output contracting, rating agency Crisil principal economist DK Joshi expects the growth in the second quarter to be 6.2%. "In the second quarter, agriculture growth is expected to be negative while industry would grow at a higher rate. I expect Indian economy to grow by 6.2% in July-September period," he said.

Axis Bank economist Saugata Bhattacharya pegged the growth rate to be in the range of 6.2-6.4%. He also expects farm output to fall, by 4%, but industry to witness strong growth.

"Growth rate is likely to between 6.2% and 6.4% in the July-September period on the back of strong industrial growth, even as agriculture could register a de-growth of 4%," Bhattacharya said. Stimulus measures helped the economy post 6.1% growth rate in the first quarter of this fiscal, against 5.8% in the preceding two quarters.

In Chandigarh, finance minister Pranab Mukherjee said on Saturday that this could be construed as start of the recovery. Hit hard by global financial crisis, Indian economic growth rate slowed down to 6.7% last fiscal from a high of 9% in the preceding three years. Mukherjee said the economic growth is expected to be in the range of 6 to 7% in the current fiscal.

The Reserve Bank of India has pegged the economy to expand by 6% this fiscal.