NCAER raises GDP growth estimate to 8.53pc for 2007-08

FE Team | Published: August 12, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

NEW DELHI, Aug 10 (PTI): Economic think-tank NCAER yesterday raised the forecast for the country's economic growth in this fiscal to 8.53 per cent in the backdrop of good corporate performance and expectations of higher farm sector growth.
"The revised forecast places overall real GDP growth at 8.53 per cent as compared to the previous forecast of 8.3 per cent. Higher growth has been largely due to agriculture and industry," NCAER said in its quarterly review.
Expectations of better monsoon and impact of higher capital inflows have led to higher growth estimates for these two sectors, it said.
NCAER's revised estimate comes days after International Monetary Fund raised the GDP forecast to 9 per cent in 2007. While Reserve Bank of India expects economy to grow at 8.5 per cent, the economic advisory council to the prime minister has pegged the economic growth rate at 9 per cent in 2007-08.
According to NCAER, agricultural production outlook for 2007-08 has improved, thanks to expectations of a better monsoon than last year. The weighted average index of rainfall during June-July 2007 is 18 per cent above normal rainfall, as compared to 8 per cent for the same period in 2006.
Growth estimates in all three components of GDP-agriculture, industry and services-were revised upward for the current fiscal.
Agriculture sector is expected to grow at 3.35 per cent as compared to 2.6 per cent earlier estimated, while industry is poised to grow at 9 per cent against the earlier projection of 8.7 per cent. The services sector is expected to log a growth of 10.09 per cent against a previous estimate of 9.9 per cent, it added.
Commenting on the growth momentum, the think-tank said while higher inflation rate, stronger rupee and tight money policy have been hurdles from the perspective of accelerating economic growth, they have not yet slowed the pace of growth.
Besides, the NCAER report noted that the projected fiscal position of the government is close to Budget expectations.
"On external balances, we are now projecting a current account deficit of 1.8 per cent of GDP as against the surplus that we had anticipated in our April projections," it said. The key reason for the change is the lowering of projected growth of net invisibles, it added.
As per the report, inflation is going to be a concern this year as well. The forecast for the wholesale prices-based inflation has been increased from 5.3 to 5.11 per cent for the current fiscal.
RBI hopes to keep inflation close to 5 per cent this year. The inflation rate has climbed to 4.45 per cent for the week ended July 28, according to official data released Friday.