Indian economy growing by 6 % in 2003-04

Tuesday, 29 April 2003, 07:00 Hrs
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NEW DELHI:The Reserve Bank of India (RBI) said Tuesday the Indian economy would grow by six percent in the fiscal year ending March 2004, helped by a recovery in farm output and upturn in industrial and services sectors.

"Real GDP (gross domestic product) growth in 2003-04 is placed at about six percent after taking into account the current trends in the various macroeconomic factors," said the RBI in its monetary and credit policy for fiscal 2003-04.

"Subject to satisfactory spatial distribution, if rainfall is around 96 percent of the long-term average, recovery in agricultural output may be over 3.1 percent during 2003-04," the central bank's report said.

"A recovery in agricultural output coupled with the continuance of the upturn in the industrial and the services sectors should help in achieving the projected growth for 2003-04."

India's economy expanded by a moderate 4.4 percent in the fiscal year ended March 31, 2003, down from 5.6 percent in the preceding year, as the country's worst drought in three decades sharply reduced agricultural output.

"The uncertainty regarding the economic outlook, however, remains high due to the ongoing geopolitical tensions," said the RBI report.

"Its adverse impact on the oil markets could have a negative impact on economic activity throughout the world, particularly on oil importing emerging markets," it added. India imports 70 percent of its oil requirements.

The central bank said it was necessary to aim for "fiscal consolidation and substantially lower fiscal deficits" to facilitate efficient monetary and debt management operations.

The fiscal deficit of the federal government, which was budgeted at 5.3 percent of GDP for 2002-03, was revised upwards to 5.9 percent. For the fiscal year 2003-04, the fiscal deficit is placed at 5.6 percent.

The RBI said despite adverse external developments India's foreign exchange reserves continued to record healthy growth during 2002-03 on account of improvement in the current account as well as strong capital and other inflows.

India's foreign exchange reserves increased by as much as $21.3 billion in one year, increasing from $54.1 billion in March 2002 to $75.4 billion by March 2003.

"This is the highest increase recorded in a single year and has occurred despite substantial increase in the international oil prices and other unfavourable developments," said the report.

Source: IANS
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