The Hindu Business Line : NCAER pegs GDP at 8.2 pc for 2006-07

The forecast
The revised projections for 2006-07 also show a higher current account deficit of 2.1 per cent of GDP and lower gross fiscal deficit of the Centre at 3.7 per cent of GDP.
The council projects annual average growth rates of 2.4 per cent for agriculture, industry growth of 8.2 per cent and services sector growth of 10 per cent.

New Delhi , Nov. 7

The National Council of Applied Economic Research (NCAER) has revised its growth projections for the economy in the current fiscal to 8.2 per cent, bolstered by positive developments in real sectors so far.

In its latest quarterly review of the economy discussed in-house at the State of Economy seminar, organised by the council here, NCAER said that this is the third forecast for 2006-07, after two earlier estimates in April and August 2006.

The latest third revision in GDP growth rate as compared with its August forecast represents an increase by 0.2 percentage points.

It is predicated on higher growth in all three major production sectors.

Agriculture, industry and services are projected to grow by 2.7, 8.6 and 9.9 per cent respectively during the current fiscal, it said.

Revised projections

The revised projections for 2006-07 also show a higher current account deficit of 2.1 per cent of GDP and lower gross fiscal deficit of the Centre at 3.7 per cent of GDP. Inflation rate is projected at 5 per cent.

The quarterly review also provides a medium-term scenario 2007-08 to 2011-12 with the projections placing the average real GDP growth at 8.2 per cent per year during the next five years.

At the sectoral level, the council projects annual average growth rates of 2.4 per cent for agriculture, industry growth of 8.2 per cent and services sector growth of 10 per cent. The export and import growth of merchandise trade is projected at roughly the same rate of 17 per cent per year.

The fiscal deficit is projected to be within the 3 percentage points of GDP at market prices.

The council contends that its medium-term scenario projections take into account the productivity enhancing effects of foreign direct investment and infrastructure development. "In other words, the policy framework should be such that such positive spill over effects are harnessed," it said adding that this places greater importance in the design and location of infrastructure projects efficiently and allowing greater interaction between the FDI projects and the rest of the economy.

The medium-term projections also suggest that more conscious efforts would be needed to move agriculture to a higher growth trajectory.

Indicators

The review takes note of the first quarter's GDP growth numbers, which suggest another year of 8 per cent growth following the last year's growth of 8.4 per cent.

This is also reflected in several indicators. The industrial output performance for the first months of the current fiscal year is better than the same period with the growth of index of industrial production for April-August 2006 being more than 10 per cent as compared to 8.7 per cent last year.

The council noted that the high rate of economic growth has benefited from favourable global capital flows and demand conditions. The merchandise exports have increased by 23 per cent in the first half of the current year. The FDI inflows in the first quarter at $1.7 billion suggest that last year's mark of $7.8 billion is likely to be exceeded this year, the council said.

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