RBI survey cuts FY14 GDP growth estimate to 6%

Forecasters expect India's current account deficit to come down to 4.5% of GDP in FY14 from 5.1% in FY13

The Reserve Bank of India’s (RBI) own survey of professional forecasters, issued today, says their prediction on real gross domestic product (GDP) growth for 2013-14 is no more than six per cent, compared to 6.5 per cent in the earlier round.

However, this is still better than the growth forecast for 2012-13. “The Reserve Bank’s 23rd round of the survey of professional forecasters shows anticipation of modest recovery in 2013-14 to six per cent, from five per cent in the preceding year,” it said in its macro-economic and monetary developments report. It reflects the views of professional forecasters outside RBI and not of the central bank.

The forecasters’ estimate of  average wholesale price index inflation says this is expected to moderate to 6.5 per cent, from the earlier one of 7.3 per cent. RBI said, “Both the latest growth and inflation projections are half a percentage downward revision from the earlier round. Forecasters expect the current account deficit to come down to 4.5 per cent of GDP in 2013-14 from a projected 5.1 per cent for 2012-13.”

The central government’s gross fiscal deficit is forecast at five per cent of GDP in 2013-14. The exchange rate of the rupee to the dollar is projected at 53.75 at the end of the current financial year, while the yield of 91-day treasury bills is forecast at 7.3 per cent. RBI noted the current slowing in growth has been amplified by the loss of business confidence.

RBI said, “Confidence has been dented by macro-economic deterioration, global macro-economic and financial uncertainties and the perception of adverse and biased information, driven in part by recent experience during the global financial crisis. In this environment, expectations are being anchored around recent bad news.”