Icra Pegs Growth At 6.5%

The economy is expected to grow at 6.5 per cent in 1999-2000 as against the Central Statistical Organisations (CSO) estimate of 5.9 per cent growth. The growth rate for 2000-01, may, however, be below the 6.5 per cent to 7 per cent level as projected by the Reserve Bank of India, according to the Money and Finance Bulletin brought out by Investment and Credit Rating Agency.

While the continued industrial performance should persist through 2000-01, there is less certainity about the South West Monsoon and a `normal crop'is not expected to be realised, says the bulletin. This is likely to pull down the growth rates for the economy as a whole, it adds.

 

The estimates of 5.9 per cent growth rate for GDP in 1999-2000 appear to be incompatible with the 6.8 per cent growth last year, according to the bulletin, as 1999-00 has been, in many respects, a much better year than the previous one. "There has been a bumper sugarcane harvest and cotton output is up, although oilseeds have suffered. Market gardening and other types of agricultural activity normally show steady year on year increase, as does fishing and forestry," the bulletin states.

Therefore, the agricultural GDP growth in 1999-00 may turn out to be better than the figure of 0.8 per cent the CSO projected.

Also, if manufacturing GDP growth is brought at par with the 8.8 per cent growth in the index of industrial production during April-February 2000 and the growth rates for the trade, hotels & resturants and storage & communication sectors are revised to 8 per cent which seems more likely than the 25 per cent erosion used in the advanced estimates of the CSO, the growth rates for the year are more likely to be around 6.5 per cent, the bulletin adds.

However, the sharp upward revision in the CSOs GDP growth estimates for 1998-99 from 5.9 to 6.8 has been mainly on account of a change in the base year to 1993-94 and not due any improvement on the economic front, according to the Bulletin.

An immediate fallout of the upward revision was that all the indices - like fiscal deficit, current account deficit - computed in proportion to the GDP were scaled down.