RBI survey pegs growth at 8.5% for FY11

Professional forecasters have revised their projections for GDP growth in the current fiscal to 8.5 per cent from the earlier estimate of 8.4 per cent, according to an RBI survey.

"Forecasters have revised their real GDP growth rate forecasts marginally upwards to 8.5 per cent in 2010-11 from 8.4 per cent in the last survey, driven mainly by increased agricultural growth and increased growth in services in the subsequent quarters," according to the Reserve Bank's 13th Round of Professional Forecasters report.

Clarifying that the survey does not represent the views of the RBI, the central bank said the forecasters have also pegged inflation at 6-6.9 per cent by the end of this fiscal, as against the central bank's own projection of 5.5 per cent.

The forecasters also expect economic growth to be 8.5 per cent next fiscal, lower than the government's 9 per cent estimate.

However, the 30 forecasters surveyed by the RBI did not all subscribe to the 8.5 per cent growth projection, which was derived on the basis of their individual growth forecasts.

The forecasters assigned the highest probability to 8.5-8.9 per cent growth this fiscal and 8-8.5 per cent expansion next fiscal, but the maximum number pegged economic growth at 9.2 per cent this fiscal and 9 per cent in 2011-12.

The forecast for agriculture growth this fiscal has been revised upwards to 4.9 per cent from 4.1 per cent in the RBI's last survey of professional forecasters.

For industry, the growth forecast has been maintained at 9 per cent, while for services, it has been revised from 9.1 per cent to 9.2 per cent for 2010-11.

Forecasters in the RBI survey pegged inflation in the range of 6 per cent to 6.9 per cent by the end of this fiscal, as against the central bank's projection of 5.5 per cent.

"Forecasters have assigned the highest 34.3 per cent chance that it (inflation) will fall in 6-6.9 per cent in end March of 2010-11," the survey said.

Inflation fell to a nine-month of low 8.58 per cent in October from 8.62 per cent in September.

Economic growth slowed down to 6.7 per cent during 2008-09 after the Indian economy came under the impact of the global financial crisis, which knocked the country off the 8.7 per cent growth trajectory achieved in the previous five years.

After the government provided a stimulus, economic growth improved to 7.4 per cent in 2009-10.

In the first quarter of this fiscal, the Indian economy expanded by 8.8 per cent. The government has predicted that the economy will grow by 8.5 per cent this fiscal and retained the target, despite industrial growth slowing down for the second consecutive month to a 16-month low of 4.4 per cent in September.