CMIE forecasts 5.8 p.c. GDP growth

MUMBAI, JAN. 9. The Indian economy is estimated to grow by 5.8 per cent during 2000-01, according to the Centre for Monitoring Indian Economy (CMIE).

Growth has already slowed down during the first half of the year to 5.9 per cent from 6.3 per cent in the first half of the previous year and the remaining two quarters do not hold any promise of accelerating this growth rate, CMIE said in a statement here today.

Industrial Output is projected to grow by 5.5 per cent, a sharp deceleration from 8.1 per cent growth recorded in 1999-00. During April-October, the IIP growth had already slowed down to 5.8 per cent compared to 6.6 per cent in the corresponding period of 1999. The rise in interest rates in July and the hike in prices of petroleum products has added to the process of the slowdown, it said.

The growth in exports was the only silver lining in the economy's current performance. Exports are projected to grow 17-18 per cent higher compared with 13 per cent growth recorded in the previous year. But the overall balance of payments situation was not so sanguine. The current account deficit is expected to reach 1.4 per cent of GDP from 0.9 per cent in 1999 mainly because of stagnant net invisibles earnings at $12-13 billion and a marginal acceleration in growth of imports to 12-13 per cent from 11.5 per cent in the previous fiscal.

Agriculture sector grew by 1.1 per cent during the first half of the current fiscal as against the 4.2 per cent growth recorded in the same period of 1999-00.

CMIE said the second half too, would continue to show a poor growth as the overall agricultural production during the year is expected to rise by just 0.6 per cent. This would be the second consecutive year of poor growth in agricultural production.

The prolonged slowdown in agricultural output has had a negative impact on demand for industrial goods, it said.

The services sector was an exception. During the first half, the sector recorded a growth of 7.8 per cent as against 7.2 per cent in the same period of the previous year.

However, the fallout of the slowdown in agriculture and industrial sector on the service sector would be a cause of concern, CMIE said.

- PTI

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