Icra Sees 1997-98 Gdp Growth At 6 Per Cent

The countrys gross domestic product (GDP) is expected to grow by around 5.5-6 per cent in 1997-98 (April-March) from the previous year, credit rating agency Investment Information and Credit Rating Agency (Icra) has said in its latest bulletin.

With three quarters of the year nearly over, the consensus appears to have settled around a prospective GDP growth of between 5.5 and six per cent, and an inflation rate of around 5 per cent, Icra said in its macro-overview.

GDP has grown annually by an average of 7 per cent in the past three years and officials expect growth of 6 per cent in 1997-98.

 

Icra expected the fiscal deficit to breach the 1997-98 target of 4.5 per cent of GDP.

Further, given the lower nominal rate of GDP expansion and the real rate falling 1-1.5 per cent below the target and inflation around 3 percentage points below expectations, the final deficit to GDP ratio is likely to be a quite a bit over the projected 4.5 per cent, it said.

Icra contested the official estimates of industrial output for the first half of 1997-98.

The rate of industrial growth in the first half of the current year is quite a bit higher, perhaps over 6 per cent, rather than the 4.7 per cent indicated by the Central Statistical Organisations current estimates, it said.

But, it said the prospects of a turnaround in the second half had dimmed due to the continuing political uncertainty.

Icra expected exports to grow between 8-9 per cent to $36 billion in 1997-98 and current account deficit to be between 1.2 and 1.3 per cent of GDP.

We are looking at the current fiscal closing with a current account deficit of under $ five billion, or between 1.2 per cent and 1.3 per cent of GDP, slightly up from the 1 per cent level of 1996-97, but lower than the 1.8 per cent of 1994-95, it said.