New Delhi: Economy will grow around 9% in this fiscal year that started in April, if global crude prices remain under control, R. Gopalan, economic affairs secretary in the ministry of finance, said on Monday.
Analysts have been trimming their 2011-12 growth forecasts for Asia’s third-largest economy, citing high inflation, possible oil price shocks and prospects of higher interest rates.
“Will the capex (capital expenditure) go down because of inflation? Could be marginal. But I don’t expect that to hit overall growth,” Gopalan told Reuters in an interview.
“So, I don’t see any concern on growth, barring crude prices.”
Oil rose above $124 a barrel on Monday, pushed higher by an escalation of violence in the oil-producing Middle East, as well as post-election unrest in OPEC member Nigeria.
An increase of $10 a barrel in crude oil prices has the potential of dampening India’s annual economic growth by 0.3-0.5 percentage points, brokerage and investment group CLSA said in a note earlier this month.
In February, the government had forecast an annual economic growth in the range of 8.75% and 9.25% for this financial year. But private economists expect the economy to grow slower than an expected 8.6% in the fiscal year that ended in March.
Last week, Goldman Sachs became the latest investment bank to have cut its India growth forecast. The Wall Street bank revised down the growth forecast to 7.8 % from 8.7% for the current fiscal year and raised its inflation forecast to 7.5%from 6.7%.