Economy to grow by 7.1% in FY04: Crisil

Economy is slated to grow by 7.1 per cent this fiscal after the excellent monsoon although fiscal deficit may overshoot the target, credit rating agency Crisil said on Monday.

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Agricultural sector is expected to grow at 7.3 per cent on the back of a robust growth in the third quarter, he said adding industry was likely to post a 6.3 per cent growth while the service sector is forecast to grow by 7.5 per cent during this fiscal.

Referring to the 5.7 per cent growth in GDP in the first quarter of 2003-04, Subir Gokarn, chief economist, Crisil, said the economy would grow by 6.3 per cent in the second quarter, 7.9 per cent in the third and 8.2 per cent in the fourth quarter.

Crisil's 7.1 per cent GDP growth forecast compares well with recent forecast by RBI (6.5-7 per cent), NCAER (6.6-7.0 per cent), CMIE (7.4 per cent), ICRA (6.5-6.9), HSBC (7.5), IMF (5.6) and ADB (6.0).

Other than Reserve Bank of India, all the agencies have already upgraded projected growth rate following abundant rainfall this year.

Projecting a below 10 per cent export growth as against a target of 12 per cent, Crisil expects the rupee to remain in the range of Rs 45-46 to the US dollar in the current monetary and interest rate scenario.

Forecasting fiscal deficit to be at 5.8 per cent of the GDP as against the official target of 5.6 per cent, he said, average inflation, which was now hovering at about 4.8 per cent would end the fiscal at 2.9 per cent.