Reserve Bank of India (RBI) on Thursday released the results of quarterly survey of Professional Forecasters on major macroeconomic indicators of medium term economic developments. According to the survey done by the RBI of 17 agencies, including the World Bank, the Indian economy is likely to grow by 5.7% in the year ending March 2010 as against the earlier Central Bank forecast of 6%. The results of the survey represent views of the respondent forecasters and in no way reflect the views or forecasts of the central bank, the RBI said.
The central bank has been conducting the survey on a quarterly basis from the second quarter ended September 2007. Done through a questionnaire responded by 17 forecasters who participated in this round, the survey covered component-wise detailed forecasts of GDP growth, inflation, savings, capital formation, consumption expenditure, export, import, interest rates money supply, credit growth, stock market movements, corporate profit, etc. The RBI will disseminate the survey results through its web site on a regular basis.
In 2009-10, bank credit is expected to grow at the rate of 16% against its previous forecast of 20%. In its annual policy statement, RBI had urged banks to expand credit beyond 20%. 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%, while it remains unchanged for agriculture and for services, at 3% and 7.5% respectively.
The forecasters are also projecting a negative WPI inflation of 1.4% in the first quarter of the current financial year against the earlier forecast of 2.4%. For the full year, while the RBI`s projection for WPI inflation stands at 4%, the forecasters have assigned `highest 40% chance` that inflation will be in the range of 5-5.9% in 2009-10.
Broad money (M3) growth is revised downwards to 17.5% in 2009-10 from the earlier forecast of 18.3%. Central Government fiscal deficit is expected to widen to 6.2% of GDP in 2008-09, whereas; the combined gross fiscal deficit is placed at 9.8%. Both these figures have been revised upwards from 5% and 8%, respectively, in the last survey.
The RBI’s objective is to restore the country’s economy to a high growth path, and India’s recovery is linked to a global rebound, Governor Duvvuri Subbarao said in Bangalore today. The central bank will consult the Government and the financial markets before pursuing steps to unwind its monetary expansion, he said. The central bank Governor said that he saw concerns over managing inflation expectations as the monetary authority injects money into the financial system. He also said in Bangalore today that the Government’s borrowing programme won’t hurt funding for the private sector
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