NCAER raises 2006-07 fiscal growth forecast to 8.1 percent

Monday, 04 December 2006, 18:30 IST
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New Delhi: The National Council of Applied Economic Research (NCAER) has raised its growth projection for 2006-07 fiscal from 7.9 percent to 8.1 percent based on expectations of improved performance in agriculture, industry and services sector. Over the next five years, too, India could register 8.2 percent growth every year, the leading think tank states in its latest monthly report released Monday. India recorded an impressive 9.1 percent growth in the first half year (April-September), according to the data released last week by the Central Statistical Organisation (CSO). In its third projection for 2006-07, NCAER states, "The revised forecast for 2006-07 places the real GDP growth at 8.1 percent. This represents an increase in growth rate as compared to our August forecast by 0.2 percentage points." Higher growth forecast is based on corresponding expected rise in growth of all three major production sectors - agriculture 2.7 percent up from earlier expectations of 2.1 percent, and 0.1 percentage points increase in growth of industry to 8.6 percent and services to 9.9 percent. "The revised projections for 2006-07 indicate a higher current account deficit of 2.1 percent of GDP and lower gross fiscal deficit of the centre at 3.7 percent of GDP," says the report. Commenting on the draft approach paper to the Eleventh Five Year Plan (2007-12), the think tank states that for the "output growth to be sustained, there is need for growth in both inputs and productivity of inputs". The medium-term scenario projections take into account the productivity enhancing effects of foreign direct investment (FDI) and infrastructure development. In other words, the policy framework should be such that such positive spillover effects are harnessed, NCAER says, stressing the need for placing greater emphasis on the design and location of infrastructure projects and allowing greater interaction between FDI projects and the rest of the economy. With conscious efforts to ensure higher agriculture growth from the levels of 1.5-2 percent in the last few years, the NCAER is optimistic of India recording 8.2 percent annual growth in the next five years. "The projections place the average real GDP growth at 8.2 percent per year during the next five years. At the sectoral level, we project annual average growth rates of 2.4 percent for agriculture, 8.2 percent for industry and 10 percent for services." It is optimistic of India's merchandise trade remaining at current levels of around 17 percent per annum.
Source: IANS