India's GDP to grow at 6 per cent in FY'10: RBI survey

The Indian economy will grow at a lower rate of 6.0 per cent in fiscal 2009-10 against the 6.5 per cent projected earlier, Reserve Bank data based on the latest survey of professional forecasters showed.

The forecast was based on a probability study by forecasters on the possibility that year over year real GDP growth will fall into various ranges, RBI said in a release.

The highest probability of 37.5 per cent was assigned to growth range of 6.0-6.4 per cent for the year 2009-10. For the year 2010-11, they have assigned highest probability of 49.3 per cent to 7.5-7.9 per cent growth range for GDP, RBI said.

For the year 2009-10, the forecast for agriculture has been revised downwards from 2.5 per cent to (-) 1.4 per cent. For industry, the forecasts have been revised upwards to 6.3 per cent from 4.8 per cent whereas, for the service sector, there was modest downward revision from 8.3 per cent in the earlier survey to 8.1 per cent in the current survey.
 
The proportion of domestic saving to GDP is expected to be lower at 33.6 per cent in 2009-10, against 35.0 per cent in the last survey. Forecasters expect gross domestic capital formation in the country to contribute 37.3 per cent of real GDP in 2009-10 (36.6 per cent in last survey), while contribution of gross fixed capital formation is expected to be 33.5 per cent (revised downwards from 35.1 per cent in the last survey).

Private final consumption expenditure has been projected to grow at the rate of 7.0 per cent, same as in the last survey.
 
Profit growth of corporate sector in 2009-10 has been revised upwards to 10.0 per cent from 7.5 per cent in the last survey. The growth in profit is expected to be 14.5 per cent in 2010-11, which has been revised marginally downwards from 15.0 per cent in the last survey.

Broad money (M3) growth is revised upwards to 19.0 per cent in 2009-10 from the earlier forecast of 18.0 per cent. In 2009-10, bank credit is expected to grow at the rate of 17.0 per cent as against its previous forecast of 18.0 per cent.
 
The central government's fiscal deficit is placed higher at 7.0 per cent of GDP in 2009-10, against 6.8 per cent in the last survey. The combined gross fiscal deficit is placed at 11.0 per cent of GDP, revised upwards from 10.1 per cent in the last survey.
 
The forecasters expect end period repo rate and reverse repo rate to be at 5.0 per cent and 3.5 respectively in 2009-10, are same as expected in the last survey.