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Economy to grow at 6.7% in 2004-05: NCAER
April 19, 2004 14:55 IST
Last Updated: April 19, 2004 15:33 IST
Close on the heels of a UN body projecting a slowdown for India, National Council for Applied Economic Research said on Monday that the economy was expected to grow by only 6.7 per cent this fiscal due to an all round deceleration in agriculture, industry and the services sector.
In its latest report, NCAER also said the fiscal deficit of the Centre was expected to be 5.3 per cent of GDP.
"GDP is expected to grow by 6.7 per cent during 2004-05 in contrast to an expected 8.13 per cent growth in 2003-04," the Delhi-based economic think-tank said.
With an expected normal rainfall at the back of very high growth in the last year, it forecast that agriculture would grow at 3.0 per cent in 2004-05 against their projection of 10.7 per cent for 2003-04.
"This contraction in agricultural growth as compared to 2003-04 would lead to a reduction in overall demand as well. This would have impact on industry and services growth," it said, reasoning that it was due to lack of demand.
Though the industrial sector was likely to be "buoyant" this year, it said, "there would be deceleration in growth as compared to last year" and expected that industry would clock 6.8 per cent growth as compared to 7.5 per cent projected for 2003-04.
The relatively low growth in industry is mainly due to slack in demand as agricultural growth would decelerate substantially and "investment is supported by higher FDI, but it will also decelerate due to contraction in demand," it said.
NCAER said the services sector was expected to slowdown but marginally at 8.35 per cent growth in 2004-05 as compared to its projection of 8.39 per cent for last fiscal.
Inflation, which was expected to average 4.71 during 2003-04, is likely to be 4.3 per cent this fiscal, it said.
On the external front, it said the exports were expected to register a growth of 13 per cent and imports at 15 per cent in 2004-05.
"The trade balance with the stronger rupee would lead to a deficit of 2.3 per cent of GDP," it said.
The economic think-tank had projected a trade deficit of 1.13 per cent for the last fiscal.
NCAER also expected foreign direct investment to grow by 4.0 per cent.