Corporate profits could be under pressure in the coming year, even though gross domestic product (GDP) and industry growth could go up. These were some of the findings given in the annual “Survey of Professional Forecasters” compiled by the Reserve Bank of India.
Way to go: With the road transport and highways ministry planning to spend Rs3.5 trillion over the next three years, many road building firms have begun working on plans to raise funds. Harikrishna Katragadda / Mint
Twenty forecasters participated in this round. The report was made public last week.
GDP growth forecast has been revised upwards to 6.5% in 2009-10 from 5.7% in the last survey. Long-term forecast for five years for real GDP was estimated at 7.5%, which is revised upwards from 7.0% in the last survey. For the next 10 years, GDP is expected to grow at 8.0%, revised upwards from 7.5% in the last survey.
The forecast for agriculture has been revised downwards from 3% to 2.5%. This could come down further, if the monsoon turns out worse than has been predicted till now. For industry and the services sector, the forecasts have been revised upwards from 4.1% to 4.8% and from 7.5% to 8.3%, respectively.
The proportion of domestic saving to GDP is indicated to be 35.0% in 2009-10, revised marginally upwards from 34.6%. The forecasters predict private final consumption expenditure to grow at the rate of 7.0%, up from earlier forecast of 6.0%.
The profit growth of the corporate sector in 2009-10 has been revised further downwards to 7.5% from 9.0%. The growth in profit is expected to improve to 15% in 2010-11.
Broad money (M3) growth is revised upwards to 18.0% in 2009-10 from the earlier forecast of 17.5%. In 2009-10, bank credit is expected to grow at the rate of 18% against its previous forecast of 16%.
Union government fiscal deficit is placed at 6.8% of GDP in 2009-10, which is same as expected in the last survey. The combined gross fiscal deficit is placed at 10.1% of GDP, revised marginally downwards from 10.2% in the last survey.
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Exports are expected to contract by 0.55% in the current fiscal, but to grow by 12% in the next. Imports are expected to contract by 3.5% in 2009-10. Net surplus under invisibles is placed at $80.9 billion (Rs3.9 trillion) in the 2009-10 against $78.5 billion.
All this sounds good. The big question is whether the government will ensure proper administration of funds or continue going the populist way in the coming years.
Infrastructural Dreams
Almost everybody is betting big on infrastructure. There are companies getting ready with their prospectuses to raise money from the capital markets for power generation, road construction, town development and even power distribution.