'Indian economy to grow by 7.1% in current fiscal'
Monday, 10 November 2003, 20:30 IST
Printer Print Email Email
NEW DELHI: The Indian economy is likely to expand by 7.1 percent in the current fiscal on the back of a sharp rebound in the agriculture sector, coupled with improved industrial performance, said a new study released Monday. A sharply higher economic growth in the fiscal year 2003-04 will be helped by a 7.3-percent expansion in the agriculture sector and 6.3 percent jump in the industrial activity, according to credit rating firm Crisil India Limited. The Indian economy grew a moderate 4.3 percent in the year ended March 31, 2003, mainly due to a 3.1 percent fall in agricultural output, as the worst drought in three decades ravaged large parts of the country. "For the first time in last four years all sectors of the domestic economy are doing well simultaneously," said Subir Gokarn, chief economist of Crisil Centre for Economic Research. "In 2003-04, the country saw normal monsoon precipitation that was spatially well distributed. This has led to very optimistic growth projections for the current fiscal," Gokarn told a press conference here. According to Crisil, although the government would miss the target for privatisation proceeds by a large amount, it would not have an adverse impact on the fiscal deficit in the current year. The central government plans to restrict its fiscal deficit below the target of 5.6 percent in the current fiscal. It has, however, repeatedly failed in the past to arrest the budget deficit within the targeted limit. "We expect the fiscal deficit to be 5.8 percent of GDP (gross domestic product) in 2003-04. Good industrial performance will neutralise the impact of increased government expenditure on the fiscal front," said Gokarn. On the domestic stock market boom, the Crisil study said the gains had been largely driven by a huge infusion of foreign funds into the trading ring. Since the stock market hit its six-month low in April this year, it has rallied dramatically with the benchmark index gaining about 60 percent. Many stocks jumped on hopes of a sharply higher economic growth in the current year. The index rose 10.2 percent in October, making it one of the best performers in the Asian region. Foreign institutional investors (FIIs), who act as the backbone for India's liquidity starved capital market, have been the main rallying force in the local bourses on hopes of higher economic growth in the current fiscal year. Net foreign fund inflows in October were at a record $1.5 billion, the highest in a month. FIIs have pumped more than $4.9 billion so far in 2003, seven times their last year's investments. The Crisil study report, however, said that the stock valuations in the market show "signs of having reached plateaus" and large gains during the rest of the year are unlikely. "FIIs tend to book profits towards the end of the calendar year, so some softening of prices can be expected then," it said.
Source: IANS
siliconindia