RBI survey of forecasters predicts 5.7% GDP growth

Our Bureau

Mumbai, May 14 The real gross domestic product (GDP) growth for the current fiscal will be 5.7 per cent, the latest survey of professional forecasters by the RBI says. This is lower than the central bank's 6 per cent projection in its Annual Policy Statement for 2009-10.

The survey on major macroeconomic indicators of medium-term economic developments is conducted by the RBI on a quarterly basis.

In sync with the lower GDP estimate, the survey has forecast a 16 per cent growth in bank credit in the current financial year, against RBI's projection of 20 per cent growth. In its annual policy statement, RBI had urged banks to expand credit beyond 20 per cent.

A sector-wise break-up of the real GDP for 2009-10 from the survey shows that growth on account of the industrial sector has been revised downwards from 5 to 4.1 per cent, while it remains unchanged for agriculture and for services, at 3 per cent and 7.5 per cent respectively.

The forecasters are also projecting a negative WPI inflation of 1.4 per cent in the first quarter of the current financial year. This is contrary to the forecast of inflation at 2.4 per cent in the previous quarterly survey.

For the full year, while the RBI's projection for WPI inflation stands at 4 per cent, the forecasters have assigned "highest 40 per cent chance" that inflation will be in the range of 5-5.9 per cent.

According to the survey, broad money (M3) is likely to grow at 17.5 per cent in the current financial year, lower from 18.3 per cent predicted in the earlier survey.

http://www.thehindubusinessline.com/2009/05/15/stories/2009051552100100.htm