Economists agree to disagree on estimates

The CMIE forecast assumes significance as IMF has projected a rather 5.5 per cent growth for the Indian economy in the current fiscal. IMF’s Asian cousin ADB has projected the Indian economy to grow at a much higher rate of six per cent.

Indian institutions like the Reserve Bank of India and Confederation of Indian Industry have forecast that Indian economy will grow at a rate ranging from 5.5 per cent to 6.5 per cent. While RBI has forecast Indian economy to grow at a rate of 6 per cent to 6.5 per cent, CII has the other day pegged the growth rate at 5.2 per cent on the lower side and six per cent on the higher side. And the Delhi School of Economics, the elite academic institution, on its turn has projected an economic growth of 6.2 per cent.

CMIE, in its latest monthly review of Indian economy, says the optimism kindled by the earlier forecast by various agencies is ‘misplaced’ and went on to add that “the economic scenario would change in 2002-03 for the worse. The real GDP growth in 2002-03 would be about 4.5 per cent”. In its view, the two broad policy measures — the Union Budget expectation of government spending increasing by 12.6 per cent and the RBI’s credit policy which ensured an easy liquidity regime — are broadly in line with what they have been earlier and they would not be able to provide any more spurt to growth. “And the growth in the recent past has only slowed down,” it reasons.

On sectoral prospects, the agriculture sector is not expected to maintain the exponential 6.5 per cent growth this fiscal and it would grow only about a paltry 2 per cent.