RBI lowers GDP growth to 5.7%
The GDP growth for the current fiscal has been fixed lower by the Reserve Bank of India’s professional forecaster’s survey. From the earlier estimation of 6% it has now been fixed as 5.7%.
Forecast by RBI:
- The growth is expected to rise further to 6.5% in 2014-15.
- The bank credit growth forecast for 2013-14 has also been revised downward to 15 % from 16 %.
- For money supply has been revised downwards in 2013-14 to 13% from 14.6 %.
- Agricultural prospects for 2013-14 are encouraging given the good monsoon so far.
- Revival in mining and manufacturing will take some more time but some improvement can be seen.
Inflation and Risk:
- RBI revised the inflation target to 5.3 % from the earlier target of 6.5 %.
- Average WPI inflation is expected to moderate to 5.3 % during 2013-14.
- The rupee depreciation of about 9 % in Q1 of 2013-14 is likely to put pressure on domestic inflation.
- Fuel under-recoveries have raised sharply due to the exchange rate depreciation and domestic price rigidities.
- Businesses have weakened but signs are there that the downturn can be contained.