RBI sponsored survey revises FY11 GDP growth to 8.7%

A survey sponsored by the Reserve Bank of India (RBI) has revised the country's economic growth projections for the current fiscal to 8.7%, from 8.5% earlier.

"Forecasters have revised their real GDP growth rate forecasts upwards to 8.7% in 2010-11, from 8.5% in the last survey. The higher forecast is driven mainly by increased agricultural growth and growth in services," said the report of RBI's 14th Round of Professional Forecasters.

The forecast for agriculture growth this fiscal has been revised upwards to 5%, from 4.6% in the last survey.

For industry, the growth forecast has been maintained at 9%, while for services, it has been revised from 9.1% to 9.6%.

Clarifying that the survey does not represent the views of the RBI, the central bank said the forecasters have pegged inflation at 6-6.9% by the end of this fiscal, as against its own projection of 7%.

The forecasters expect economic growth to be 8.7% next fiscal, lower than the government's 9% estimate.

"Forecasters have assigned the highest (36.7%) chance that it will fall in 6.0-6.9% in end-March of 2010-11," the survey said.

While inflation rose to 8.43% in December, from 7.48% in the previous month, the economy grew by 8.9% in the first half of the current fiscal.

The survey said that the economy will clock 8.9% growth in the third quarter (October-December), marginally higher than 8.7% projected in the last forecast.

In the fourth quarter of 2010-11, the GDP growth is placed at 8.5%, also revised upwards from 8.3% projected in the last round of survey.

Meanwhile, Finance Minister Pranab Mukherjee today exuded confidence that the economy will grow by 8.5% this fiscal. The industrial growth slowed to a 18-month low of 2.7% in November.

However, the output of the six core infrastructure industries grew by 6.6% in December, 2010, vis-a-vis 6.2% expansion in the year-ago period. Economist said this healthy growth will have a positive impact on December's Index of Industrial Production (IIP).