New Delhi: Conforming to forecast of PM’s Economic Advisory Council and other economists, economic think-tank NCAER has also projected moderation in economic growth at 7.8% for the current fiscal, from the earlier estimate of 8.8%.
The one per cent downward revision is attributed to recent hike in interest rates, rising inflation and crude oil prices and reduction in the private investment by about Rs 60,000 crore.
Besides, increase in central government subsidies by Rs 20,000 crore and reduction in the world output by one per cent to four per cent in 2008 would have bearing on the growth, NCAER said in its latest monthly report.
Though fiscal deficit is not projected to rise much above three per cent, the Current Account Deficit is projected to grow to 6.5% of GDP, it said.
Assigning the reasons for high CAD, the report said, a combination of higher crude oil prices and lower global demand has widened the projected current account imbalance.
Notably, Indian economy witnessed a growth of 9.1% during 2007-08.
The decline in growth is lower in all the main sectors of the economy, it said, adding, industry is expected to grow at 8.4%, against the previous forecast of 9.4% while services would expand by 9.1%, compared to 10.5%.
However, the growth in the agriculture sector has been kept unchanged at 2.5%.
On inflation, the NCAER report said the Wholesale Price-based inflation is likely to be at 7.9% during the fiscal, against the earlier projection of 5.2%.