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New Delhi, Nov 7: Taking note of a buoyant manufacturing sector, favourable capital inflows and demand conditions, economic thinktank National Council of Applied Economic Research (NCAER) projected a GDP growth rate of 8.1% for 2006-07 in its revised forecast for the third quarter.
This represents an increase in growth rate as compared with the August forecast by 0.2 percentage points.
The forecast is based on higher growth in all three major sectors—agriculture, industry and services—slotting their growth forecasts at 2.7%, 8.6% and 9.9%, respectively.
The revised projections for 2006-07 indicate a higher current account deficit of 2.1% and lower gross fiscal deficit of the Centre at 3.7% of GDP, the thinktank said in its Quarterly Review. The inflation rate is projected at 5%.
NCAER’s projections for a medium-term scenario for 2007-08 to 2011-12 place the average real GDP growth at 8.2% a year for the next five years.
At the sectoral level, the projected annual average growth rates were 2.4% for agriculture, 8.2% for industry and 10% for services sector.
The export and import growth of merchandise trade is projected at roughly the same rate of 17% a year.
The fiscal deficit is projected to be within 3 percentage points of GDP at market prices, according to the report. As the medium-term scenario projections take into account the productivity enhancing effects of FDI and infrastructure development, the policy framework should be such that such positive spillover effects are harnessed, the thinktank said.
Greater importance has to be given to designing and locating infrastructure projects efficiently and allowing greater interaction between the FDI projects and the rest of the economy.
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