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Slower GDP at 7.1% for FY’09 could soften rates

Slower GDP at 7.1% for FY’09 could soften rates
PTI
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First Published: Mon, Feb 09 2009. 04 45 PM IST
Updated: Mon, Feb 09 2009. 04 45 PM IST
New Delhi: India’s economy is expected to expand by 7.1% in 2008-09, slower than last year’s 9%, as the global financial crisis hammered manufacturing, financial services and farm sector output.
Mining and other services may, however, act as a prop to the economy, say the estimates released today by the Central Statistical Organisation.
Whether or not growth will slow down further next year would depend on continuation of fiscal stimulus, Planning Commission Deputy Chairman Montek Singh Ahluwalia said.
“We can continue the fiscal stimulus in the next year. It can be done as part of the full budget...In my view there would be a continuing need for fiscal stimulus and I hope we can do that,” he said.
Farm sector output is projected to grow by 2.6% in FY’09, slower than last year’s 4.9%, manufacturing by 4.1%, down from 8.2%, construction by 6.5% against last year’s 10.1% and financing, insurance, real estate, business services by 8.6% against 11.7%.
Commenting on the outlook for the Indian economy, Ahluwalia said, “The Indian economy should not be slowing down like the rest of the world.”
The estimates match the one projected by the Prime Minister’s Economic Advisory Council and are a tad higher than what the Reserve Bank has estimated.
Commenting on the outlook for the Indian economy, Ahluwalia said, “The Indian economy should not be slowing down like the rest of the world.”
The estimates are identical to the one projected by the Prime Minister’s Economic Advisory Council and a tad higher than what the Reserve Bank has forecast.
“The possibility of agriculture figures revising is there. There will be some upward revision in the agriculture figures. There is possibility that there will be some downward revision in services,” HDFC Bank chief economist Abheek Barua said.
Already, exports have taken a knock and so have jobs tied to the sector.
Commerce Secretary G K Pillai had earlier this month, quoting various estimates, said that about 1.5 million people employed in export sector would be out of jobs by March this year.
The country’s total national income is likely to be Rs29,61,249 crore in the current fiscal, showing a rise of 7.1%.
Although the Gross Domestic Product (GDP) growth rate during the current fiscal is estimated to drop, per capita income is expected to soar by Rs4,801 to Rs38,084.
Per capita income, which is an important indicator of economic development of a nation, was Rs18,885 during 2002-03.
GDP numbers exude optimism; indications of softening rates: FS
Finance Secretary Arun Ramanathan said there are indications of softening interest rates. “There is room for optimism. That is what (GDP) numbers indicate,” Ramanathan told reporters here.
When asked whether interest rates would soften, he said indications are there.
Queried on whether banks would cut interest rates, he said that is for bankers to decide. “Let us see,” he said when asked whether PSU banks would further cut interest rates as they have been aggressive in doing so.
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First Published: Mon, Feb 09 2009. 04 45 PM IST
More Topics: GDP | India | Economy | Commodities | RBI |