RBI-sponsored survey lowers growth forecast to 7.9%

A Reserve Bank sponsored survey has lowered the growth projection for the current fiscal to 7.9% from 8.2% estimated earlier and pegged March-end inflation at 7-7.9%.

"For 2011-12, forecasters have revised their real GDP growth rate projections to 7.9%," RBI said in a release on a survey conducted by 'Professional Forecasters'.

RBI itself in its monetary policy had projected 8% growth rate for the current fiscal, while the Prime Minister's Economic Advisory Council expects it to be 8.2%. The economy expanded by 8.5% in 2010-11.

On inflation, the survey said it would come down to 7-7.9% by March-end, from 9.44% in June.

Food inflation, which accounts for 15% in the overall wholesale price index (WPI) basket, was 9.90% for the week ended July 30.

The growth rate projection for agriculture, industry and services are 3.5%, 7.4% and 9% respectively.

"For agriculture there has been an upward revision and for the industry and the services, there is a downward revision from the previous round," it said.

The survey, conducted between April and June 2011, provides forecast for major macro-economic indicators relating to short and medium term term economic developments.

It did not take into account the impact of downgrade of the US Sovereign ratings by Standard & Poor's to AA+ from AAA on the domestic economy.

The survey said the average inflation in the July-September period will remain at 10% level. The RBI in its first quarterly monetary policy last month, too, had said that inflation would remain at elevated level till November.

The rate of price rise may see some moderation in the early months of 2012, it added.

The survey projected the corporate profitability to decelerate during the current fiscal on account of various macro-economic factors.

"The profit growth of corporate sector in 2011-12 has been projected to be 12.2%, revised significantly downwards from 20.0% in the previous round of survey," it said.

However, it has projected a high fiscal deficit of 5.3%, much above the government estimates of 4.6% for the fiscal 2011-12.

The survey said, it expects the repo (short-term lending) rate to remain at around 8% during the fiscal. Earlier, it had projected that the rate would be at 7.25%.

Exports it said woudld grow by 20.05% during 2011-12 up from 17.2%estimated earlier.

As regards imports, the Survey said, it could grow by 23% during the year as against 20% forecast earlier.

Referring to the long term GDP forecast, it said the growth rate during 2012-16 would be 8.5%. The 10 year growth forecast (2012-2021) has been pegged at 8.8%.