Credit Policy: GDP growth estimate stays at 8.5%

Credit Policy: GDP growth estimate stays at 8.5%

BS Reporter / Mumbai July 31, 2007

The Reserve Bank of India (RBI), for policy purposes, has retained the real GDP growth expectation at 8.5% "barring domestic or external shocks."

The policy statement said: "On a review, the prospects for growth in 2007-08 appear positive at the current juncture. The IMD has maintained its initial forecasts of rainfall at 93 per cent of the LPA for the country as a whole in the 2007 south-west monsoon season.

"Accordingly, by current indications, a return to trend growth in agriculture should be realisable. Growth in industrial and service sector activity, which constitute more than 80% of the economy and contribute over 94% of headline growth, is expected to be sustained given the current momentum of expansion despite evolving uncertainties observed in recent weeks.

"Overall, for policy purposes, the projection of real GDP growth in 2007-08 at around 8.5% as set out in the Annual Policy Statement of April 2007, is retained, barring domestic or external shocks."

The statement added that acceleration of growth in the Indian economy is mainly investment-driven. "According to the CSO