RBI forecasters cut growth projection for FY13 to 5.5%

The economy is likely to grow by 5.5 per cent this financial year, according to the Reserve Bank of India’s (RBI) survey of professional forecasters. An earlier round of survey had projected GDP growth rate of 5.7 per cent for the year.

For the next financial year, forecasters said that the economy is likely to expand by 6.5 per cent, RBI said in its macroeconomic and monetary development report released on Monday.

Services GDP growth, the biggest contributor to overall GDP growth, is likely to be 7.4 per cent, down from the earlier projection of 7.8 per cent. Industry growth has been revised to 2.8 per cent from 3 per cent. Agriculture and allied activities have been pegged at 1.5 per cent, up from the earlier 1.4 per cent.
 

SURVEY OF PROFESSIONAL FORECASTERS    (Q3)
Indicator	2012-13 (E)	2012-13 (L)	2013-14 (E)	2013-14 (L)
GDP growth (%)	5.7	5.5	6.6	6.5
WPI inflation (%)	7.7	7.5	6.7	7.0
Exchange rate (a $)	Rs 52	Rs 54	Rs 50.8	Rs 52
Fiscal deficit  (%)	5.7	5.7	5.3	5.3
CAD (%)	3.5	4.2	2.7	3.5
E: Earlier Estimate, L: Latest Estimate                                                   Source: RBI

Wholesale price index (WPI) inflation is expected to moderate to 7.5 per cent from the earlier projected levels of 7.7 per cent by March end. WPI is to moderate further to 7 per cent in FY14. An earlier round of survey had projected WPI inflation at 6.7 per cent by March 2014.

Fiscal deficit and current account deficit (CAD) are expected to improve in FY14. with the CAD as a percentage of GDP projected to be 3.5 per cent and 4.2 per cent for the current year. However for the both years professional forecasters have raised their earlier estimate. Earlier they had projected CAD to be 3.5 per cent of GDP for this year and 2.7 per cent for the next year.

Forecasters have stuck to 5.7 per cent fiscal deficit which is higher than finance ministry’s target to contain it at 5.3 per cent for the year and finance minister P Chidambaram is confident of sticking to it. Forecasters have predicted 5.3 per cent of fiscal deficit for the next year.

The median index of professional forecasters expect rupee to be in the 54 per US Dollar by the end of the year and at Rs52 levels for the next year which is higher than the earlier round of survey.