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NCAER lowers India's GDP forecast to 4.8%

Coming close on the heels of International Monetary Fund lowering India's growth projections to five per cent, NCAER on Thursday forecast that the GDP growth this year would be even less at 4.8 per cent against its earlier estimate of 5.5 per cent.

"The revised macroeconomic forecasts for 2002-03 place overall real GDP growth at 4.8 per cent with stagnant agricultural output, industrial growth at 5.6 per cent and services growth of 6.9 per cent," National Council of Applied Economic Research said in its latest review of the economy.

Warning that the fiscal position of the central government is expected to worsen despite the improved tax collection so far, the report said the fiscal deficit would go up to 6.3 per cent of GDP against a budgeted 5.3 per cent.

"The negatives with respect to the fiscal balance are in the form of additional expenditure for drought relief, additional support to ailing financial institutions and uncertainty over meeting the divestment revenue targets", it said.

The agricultural output is assumed to remain at the same level as in 2001-02 or to register a zero growth in real terms, it said adding that gross industrial output excluding construction was, however, projected to increase by 5.6 per cent and public administration and defence by 6.9 per cent.

Though the monsoon rains were poorly distributed, the report noted that by the middle of September, 85 per cent of the crop area was covered by normal to excess rainfall.

However, despite this, the report said, "the impact of the poor monsoon will be on the kharif crop, on kharif foodgrains and kharif oilseeds".

While paddy, coarse grains, pulses and oilseeds output was expected to suffer because of the inadequate rainfall, in the case of fibres and sugarcane, the impact may not lead to an output decline.

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