India’s CMIE raises 2007/08 GDP forecast to 9.1%

India’s CMIE raises 2007/08 GDP forecast to 9.1%

By Reuters

Mumbai: India’s Centre for Monitoring Indian Economy (CMIE) revised its estimate of India’s GDP growth to 9.1% in the fiscal year 2007/08, up from its earlier 9%, citing a robust growth in services and industry.

The independent think tank expects industry to grow 9.5% and the services sector to rise 10.7%, in the fiscal year ending March 2008. It has revised its farm output growth estimate to 3.9%, from 3.1% earlier.

“While fresh investments continue to flow in, slowdown in the production growth of consumer durables and decline in personal loan disbursement by banks raises questions over the sustainability of the consumer expenditure growth in future," CMIE said in its latest economic review.

The economy grew 9.3% in the June quarter, but analysts expect the pace to moderate later in the year. CMIE expects inflation to moderate due to a higher base effect. “We expect inflation in the WPI (wholesale price index) to reduce a tad to close to 3.5% in the coming months because of a higher base," it said. The government has said it wants to keep the widely watched wholesale price inflation rate close to 4% this fiscal.

CMIE expects interest rates to remain stable due to a strong growth in banks’ deposits, slowdown in credit expansion, ample cash conditions in the banking system and comfortable inflation levels.