India’s economy may grow at 8.4 percent in the current fiscal year, led by local consumer demand, robust manufacturing and services growth, a central bank survey of 260 economists said on Thursday.
The study of professional forecasters conducted by the Reserve Bank of India (RBI) revised India’s economic growth forecast for the fiscal year to 8.4 percent, from 8.2 percent in the previous survey. That is just below the RBI’s own estimate of 8.5 percent growth by March next year, announced at its policy meeting last month.
“GDP growth rate forecasts have been revised marginally upwards to 8.4 percent in 2010-2011, driven by private consumption growth, stronger industrial activity and further contribution of services,” the survey said.
Inflation, which has become a sticky issue for India’s Congress-led government, may fall to between 6.0 percent to 6.9 percent by March next year, from 10.55 percent in June, economists said.
The RBI raised its main interest rates twice last month, and four times in the year, to tame inflation that is souring the experience of economic growth for millions.
India’s inflation rate is now the highest among the G20 economic powers and contrasts sharply with developed nations, such as the US and Japan, where deflation is more of a concern.
The forecasters polled said the RBI may raise the repo — the rate at which the bank lends to commercial banks — by a further 50 basis points to 6.25 percent by March next year.
The reverse repo — the rate the central bank pays to banks for deposits — could be raised by an additional 25 basis points in the current fiscal year to 4.75 percent, they said.
RSS