GDP to grow at 8 percent this fiscal, inflation high till September: FICCI

May 30th, 2011 - 6:39 pm ICT by IANS  

New Delhi, May 30 (IANS) The Indian economy’s growth will moderate to 8 percent this fiscal compared to the 8.6 percent it is estimated to have expanded by in 2010-11, according to a survey of economists conducted by FICCI.

FICCI’s Economic Outlook Survey conducted by polling 12 leading economists from the banking and financial sector and research institutions projected the annual gross domestic product rate at 8.6 percent for 2010-11.

For 2011-12, GDP growth is expected to decelerate to 8 percent, said the FICCI survey.

The survey also predicted the rate of inflation to further accelerate over the first half of the fiscal year (April-September) because of an expected increase in diesel, cooking gas and kerosene prices and supply-side constraints in vegetables, fruits, pulses, milk and eggs.

The economists said inflationary pressures would moderate at around 7 percent by the end of the fiscal as international crude oil prices were expected to stabilise once the over-reaction to problems in the Middle East, which resulted in prices of oil shooting up, calmed down.

The measures expected to be taken by the government to ease supply-side bottlenecks and the possible lagged impact of the successive policy rate hikes by the Reserve Bank of India coming in to play would also impinge the demand-side pressure on inflation.

“A majority of the economists felt that the RBI should stop its current anti- inflationary rate hikes when the inflation moderates to around 7 percent to 7.5 percent. They expect that the RBI will further increase the repo rate by another 50-75 basis points in this rate hike cycle,” FICCI said in a statement.

The RBI will conduct its mid-quarterly policy review on June 16.

Some of the other forecasts for 2011-12 by the economists in the survey are:

– Agriculture and allied activities growth at 3.7 percent

– Industry growth at 8 percent

– Services growth at 9.2 percent

– Fiscal Deficit at 5 percent of GDP

– Inflation rate (end march 2011) at 6.7 percent

– Trade Balance at - 7.7 percent

– Current Account Deficit at - 2.8 percent of GDP

For the first quarter of the current fiscal, the GDP growth was pegged at 8.1 percent, while inflation rate was expected to be at 9.1 percent.

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