NCAER revises GDP growth forecast to 8.13% for fiscal

Based on a healthy growth of the agriculture sector, the National Council of Applied Economic Research (NCAER) has forecasted a GDP growth rate of 8.13 per cent for the financial year 2003-04. However, the economic think tank has issued a note of caution on the fiscal deficit front while stating that the deficit figures would shoot up to 6.1 per cent of GDP against the Budget forecast of 5.96 per cent mainly due to increased government expenditure and surging inflation. According to NCAER’s latest quarterly review, “on the assumption that agriculture output would grow by 10.7 per cent, GDP growth is expected to reach 8.13 per cent this fiscal.” NCAER had earlier projected a growth rate of 6.98 per cent for the fiscal. This forecast is higher than the RBI’s ‘conservative’ estimate of 7 per cent growth with an upward bias.

The economic think-tank said that the overall assessment of the economy was one of robust growth with impetus coming from agriculture and industry, while services were expected to broadly follow the previous year’s growth pattern.

“The higher fiscal deficit is on account of higher government consumption expenditure and rising inflation,” it said. However, the review has stated that the wholesale price index (WPI) inflation, now at 6.21 per cent, would fall to 4.7 per cent in 2003-04.

Painting a rosy picture for the industrial sector, the economic think tank has stated that the sector was expected to grow at 7.5 per cent due to higher investment demand and increased demand from agriculture segment.