The economic think tank of India, National Council of Applied Economic Research (NCAER) has predicted differently from Government and RBI’s assumption in terms of India’s Gross Domestic Product (GDP), inflation and fiscal deficit rate by reporting 8.9 %, 4.9-5.2% and 2.6-3.0 percent respectively.
Unveiling its report on Tuesday, NCEAR has predicted, ‘India’s growth rate might reach to 8.9% if the global recession would slow down. In case, of continuing the global recession and higher inflation rate, the minimum growth rate would be at 8.5%.’
This prediction of NCAER is higher than the government and RBI’s estimation that have predicted the GDP of India at 8.5% and 8.4% correspondingly.
“The investment scenario is healthy, in the more comprehensive case, GDP growth is projected at 8.9%, however, in rising inflation and slow downing, the economy may grow at 8.5%” NCAER report says.
According to the economy think tank, the global factors and the rising inflation are short-term fear and do not affect India’s productivity in long terms.
Pointing out the factors behind higher growth rate, NCAER argues that the high investment level, expanding consumer demand and government’s policy would boost this growth. Besides this, the relief in various taxes, the scrapping of import duty in essential commodities will reduce the inflation.
The implementation of Sixth Pay Commission’s recommendation would pump to employees to spend more and this would drive the internal demand of the product.
NCAER is also viewing that the inflation is slower down this as against last year’s data except in few products. Only the prices of milk, vegetables, pulses, edible oils, dairy products, cement and steel have been raised while in remaining products, it is still under control.
The government’s effort of taming the spiralling prices would also be affected soon, as the economic think-tank believes.
On the issue of wheat and rice, NCAER reported that the Central agencies have procured more than the targeted procurement of wheat and rice in its stock. It has crossed the whopping 19 million tonnes of wheat and 13.5 million tonnes of rice till April 1, 2008.
However, it has also warned the government to improve the productivity to meet the future demand.
In terms of inflation rate, it has also reported the pleasing data by estimating at 4.9-5.2% for 2008-09 as against 4.4% of last year data. At present, as per Wholesale price index’s stats, the current inflation rate is three and half year’s high of 7.57%.
In fiscal deficit, it has shown it to be continue between 2.6-3 percent despite of high subsidy grant and higher government spending but expect that government would try to dodge the fiscal deficit from last year’s 3.1 to 2.6%.
NCAER has also reported the agricultural growth rate by 2.5%, industrial growth by 8.9-9.4%, export growth by 16.6-17.9% and import growth at 18.2-19.5% for 2008-09.
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