Indian GDP to grow by 8.3% in 2006-2007

he three year period beginning 2003-04 has seen the Indian economy expand at an unprecedented average annual rate of over 8 per cent. With volatile agriculture, the industry and services sectors have emerged as stable and reliable drivers of overall GDP growth. The recent data also confirms that the growth momentum in India is becoming more broad based with both consumption and investment emerging as twin growth engines.

CRISIL expects the buoyant growth performance to continue and has upgraded its GDP forecast to 8.3 percent in 2006-07 from its earlier forecast of 7.3 per cent. Agriculture, Industry and services sectors are projected to grow at 2.6, 9.2 and 10 per cent respectively.

The south-west monsoon this year has been near normal – but with distorted timeliness and geographical spread. CRISIL’s Deficient Rainfall Impact Parameter (DRIP) projects an agricultural GDP growth of 2.6 per cent for the current fiscal year. The agriculture forecast used as an input into CRISIL’s macro model leads to robust growth projections for the industrial and services sectors as mentioned above.

Subir Gokarn, Executive Director and Chief Economist, CRISIL adds, “The recently released official GDP growth numbers for the first quarter of 2006-07 surpass market expectations. They also indicate that high oil prices and a series of interest rates hikes by RBI have failed to dampen growth performance. The persistence of excellent corporate performance, strong industrial growth during July and August and impressive advance tax collections of the government lead us to believe that the growth momentum remains very strong”.