Indian economy likely to grow at 7.2% in 2009/10 Today, Dr. C. Rangarajan, Chairman, Economic Advisory Council to the Prime Minister released the document Review of the Economy-2009-10. Dr. Rangarajan, expected strong rebound in the third and fourth quarter especially in industrial activities. Outcome in the farm sector much better than feared earlier in part due to proactive measures by government. According to the report, Indian economy projected to grow at 7.2% in 2009/10, 8.2% in 2010/11 and 9.0% in 2011/12.
The growth in agriculture sector projected to be at -0.2% in 2009-10 compared with 1.6% in 2008-09. On other hand, growth in industrial sector including construction projected to grow at 8.6% in 2009-10 compared with 3.9% last year. The growth in service sector projected at 8.7% in 2009-10 compared with 9.8% last year. Developed countries have come out of recession but it is a weak recovery with downside risks to growth, added in the report. The economy report expected 36.2% investment rate in 2009-10 compared with 34.9% in 2008-09. The saving rate expected at 34% in 2009-10 compared with 32.5% last year. On external sector, export volume projected at $168.7 billion in 2009/10. Imports to show significant improvement in Q4. Projected at $296.8 billion in 2009/10. Overall merchandise trade deficit for 2009/10 projected at $ 128.1 billion or 9.8 % of GDP. The report projected net invisibles: $98.6 billion and expected strong growth in remittances and recovery in service exports. Capital flow witnessed net accretion $ 17.6 billion compared with -$ 18.9 billion last year. Net capital flow for 2009-10 estimated at US $ 48.5 billion in 2009-10 compared with US $ 8.7 billion in 2008-09. Inflation is the key issue and risk of rise in international commodity prices may disturb the domestic price stability. RBI action will depend on pick up in credit, liquidity conditions and further pressure on prices. To control the food inflation, report has suggested timely release of food grain in sufficient quantity below prevailing market prices, advance planning for timely imports at early signals of shortfall in production and development of a distribution channel to supplement the PDS. The report has projected need for fiscal correction with following projections: � Debt-GDP ratio 76.6% in 2009/10 (70.6% in 2000-01) � Large revenue and fiscal deficits of past two years unsustainable. � Possible reduction of fiscal deficit of centre by 1.0-1.5% in 2010/11. � Feasible to reduce expenditure-GDP ratio by 1%. � Expand service tax coverage. Unify the rate structure of CENVAT and service tax and peg it between the current and the previous higher level. The report has found two major constraints for the growth namely lower growth rate in agriculture and weak power generation. There is an urgent need to scale up nuclear power generation. -- You received this message because you are subscribed to the Google Groups "Kences1" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/kences1?hl=en.
