RBI survey raises GDP forecast to 6.9%

A median forecast released by the Reserve Bank of India (RBI) in the pre-policy 'Macroeconomic and Monetary Developments: Third Quarter Review 2009-10' this evening raised the economic growth projection to 6.9 per cent from the 6 per cent projected three months ago.

Inflation emerged as a major concern during the third quarter, dominated by significant supply factors, the RBI survey said.

Noting that inflation of food items soared to 21.9 per cent, the RBI said: "In December 2009, there have been signs of emergence of generalised inflation."

Moreover, it added, the high inflation arising from rising food prices could spill over to non-food items and further add to inflationary pressures.

The WPI-based inflation, which rose from sub-zero level last year to 7.3 per cent in December, is expected to cross 9 per cent by the end of March, as indicated by the Chief Statistician of India Pronab Sen.

According to the professional forecasters’ survey, production of kharif foodgrains and oilseeds is expected to decline by about 16 per cent over the previous year.

The RBI survey further said that turnaround in credit growth witnessed since November, 2009. The central bank has so far completed over 98 per cent of the net market borrowing programme of the Union government in G-Sec market.