Despite the recent slowdown in manufacturing, the government remains upbeat that overall economic growth will not be affected much and will remain close to the estimated 9%.
The Prime Minister?s Economic Advisory Council, headed by C Rangarajan, is expected to take a similar view in its Economic Review for 2007-08, which is likely to come out this week.
The review will carry forward projections made in the EAC?s Economic Outlook for the fiscal, but will also take into account actual figures available for the fiscal.
The Economic Outlook, which had been released in July 2007, projected growth at 9%, lower than the 9.4% in 2006-07. It had also projected lower growth in all three sectors – a growth of 2.5% in the farm sector, 10.6% in industry and 10.4% in the services sector.
Government sources told FE that GDP growth was expected to be near 9%, but may be a few decimal points lesser due to the sluggish growth in the manufacturing sector. This will, however, be well above the RBI estimate of 8.5% growth for the fiscal and similar projections by some other institutions. According to latest figures, industrial production fell to 5.3% in November 2007 from a year earlier, which was the slowest rate this fiscal. The growth in key infrastructure sectors- crude oil, cement production and electricity generation- too has dipped.
The government also expects inflation to stay well under control and way below the 5%?5.5% benchmark in the three months left of the fiscal. Sources, however, added that rising food prices globally and the expected increase in fuel prices domestically will have an impact on inflation in the 2008-09.