Date:11/07/2003 URL: http://www.thehindu.com/2003/07/11/stories/2003071101981600.htm

Business

NCAER revises economic growth upwards

By Our Special Correspondent

NEW DELHI JULY 10. Based on the prospects of a good monsoon this year, the National Council of Applied Economic Research (NCAER) has revised upwards its growth projection for the Indian economy to 5.8 per cent from 5.6 per cent estimated in March. The economy grew merely 4.3 per cent last fiscal.

According to NCAER, the prospects of good monsoon could result in agricultural gross domestic product (GDP) increasing by 8 per cent as kharif output is expected to increase by about 14 per cent and rabi by about 7 per cent.

The strong industrial growth seen in the last quarter of 2002-03 is also a reason for expecting higher growth, the NCAER has said, but has added that while recovery was continuing, the signals were mixed. Besides, consumer non-durables grew at 12 per cent and manufacturing investment at 8.3 per cent in 2002-03. Another positive feature was the continuing decline in the interest rate on government securities.

But the prime lending rate remains high and required to come down for all categories of borrowers, the NCAER feels.

Exports too are reported to be doing much better than expected. India's exports crossed $50 billion in the very first year of the medium term (2002-07) export policy and export growth during April and May 2003 had been 11.12 per cent at $8.8 billion.

NCAER has, however, cautioned on the inflation front, saying it remained a cause for concern. On a year-on-year basis, it crossed 6 per cent in April but fell to 4.97 per cent during the week ending June 14. Subsequently, it went up again to 5.21 per cent.