The Hindu Business Line : Crisil sees moderate growth in GDP

Advertisement

Mumbai March 5 The country's GDP growth is expected to moderate to 7.9-8.4 per cent in 2007-08, according to a research report by Crisil.

The rating agency estimates inflation to be at 5-5.5 per cent and the yield of the 10-year government stock to be at 7.8-8 per cent in the next fiscal. The rupee is expected to stay in the band of 44-45 in 2007-08.

"A combination of global and domestic factors could moderate the growth momentum slightly in fiscal 2008.

"A mild slowdown in the US economy, relative to its 2006 performance, and a drop in the Chinese growth rate are key global influencers; however, growth momentum is more vulnerable to high inflation and overheating in the domestic economy", said a press release quoting Dr Subir Gokarn, Executive Director and Chief Economist, Crisil.

The estimates of the risk of fiscal slippage stand at Rs 500 crore which is about one percentage point of GDP, according to Crisil.

Over the next five years, investment growth will be led by the continued growth momentum in industrial and infrastructure investments. The continued strength of industrial investment is likely to reverse the present trend of rising operating rates across industries by the fiscal year 2008-09, said the report.

Sectors that are expected to drive the growth in investments include metals, automobiles and cement. This is due to capital expansion and resulting investments in plant and machinery and a rapid growth in the construction segment led by the non-housing sector.

The report says that investments in the housing sector, which are led by urban activity, may see a slowdown over the short to medium term, as real estate prices have begun to push the limits of affordability.

"The fastest growth in the construction segment is expected in the ports and airports and office space segments, although, on a smaller base. On the other hand, the largest quantum of investment growth is likely in roads and railways, urban infrastructure, irrigation and industrial sectors," said the release quoting Mr Ajay Dwivedi, CEO, Crisil Research & Information Services Ltd.

More Stories on : Economy | Credit Rating

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page