Forecasts to be revised downward: Basu

Chief Economic Advisor in the finance ministry Kaushik Basu on day said the current rate of inflation was unacceptable and might impact growth prospects. He indicated the 9 per cent GDP growth forecast for 2011-12 may be revised downwards.

“All over the world there has been revision... So we may go in for a revision. Obviously, it is not going to be upwards,” Basu told reporters on Thursday.

While he did not give a number, Finance Minister Pranab Mukherjee in Hanoi projected India's economic growth at 8 per cent in the current financial year — one percentage point lower than the government’s original estimate — in the wake of steps being taken to combat inflation.

The Reserve Bank of India (RBI), in its credit policy statement on May 3, reduced the growth estimates to 8 per cent, as it increased the policy rates for the ninth time in over a year. The central bank decided to go for a sharper-than-expected 50 basis points increase in the policy rates to rein in inflation.

While the government generally takes a mid-year stock of the economy, the finance ministry would begin reviewing the targets by the end of this month, Basu said. He said the current level of inflation was “unacceptably high”, but it would dip down a bit.

The Wholesale Price Index-based inflation for March was 8.98 per cent. While RBI has stated the level of price rise would remain elevated till September, Basu said inflation for April would be definitely below 9 per cent. He said global co-ordination was required to tackle inflation.