The National Council of Applied Economic Research (NCAER) has projected the overall growth of gross domestic product (GDP) for the current fiscal between 4.9 per cent and 5.2 per cent. Gross domestic deficit of the Centre is projected at 5.9 per cent of GDP at market prices.According to the monthly Macrotrack report of the NCAER, the industrial sector, including construction, mining and power, is expected to grow by 6.5 to 6.6 per cent in 2002-03. While services are projected to grow by 6.9 to 7.1 per cent, agriculture output is projected to grow by zero to 1 per cent in the current fiscal. From the production side, “The dampener for the current year is agricultural growth.” The forecast, however, is subject to uncertainties over the estimates of agriculture and the developing international scenario on oil price and supplies in the context of the intensified tension between the US and Iraq, says the NCAER report.The good news is on inflation, with the projected increase in Wholesale Price Index (WPI) to grow marginally, from 3.4 to 3.7 per cent. Current account deficit is expected to be 1.5 per cent, with exports likely to grow by 15 per cent and imports at 10 per cent.The monetary policy has accommodated the liquidity needs of the economy without being too easy. Bank credit to commercial sector expanded by 10 per cent in the first half of the year, as compared to 2 per cent in the last year for the same period, says the NCAER report. “The overall price impact of drought-like situation in the monsoon has been mild.”While WPI for primary articles increased actually slower in the first half of the year relative to the increase seen in the same period last year, in the case of foodgrains prices declined. However, prices rose sharply, 9.8 per cent, and WPI for fruits and vegetables increased by 5.1 per cent.In the industrial sector, investment expenditures are yet to show significant improvement in the first half of the current fiscal. Growth in domestic capital goods and in their import was significant, but other indicators are yet to show improvement, says the NCAER report. “Although interest rates to the corporate sector have declined, more competitive conditions combined with a slowdown in policy reforms seen in the first half of the current fiscal year may have adversely affected investment spending.”In the case of services sector, the financial sector growth is sustained by the buoyancy in housing loans, expansion of telecom services as well as expanding insurance business.The expenditure side of the national accounting system provides a more “intuitive feel” for the trends in the economy, says the NCAER report. “Growth in the private consumption expenditures as reflected in the production of consumer goods is higher than last year’s. The surprising pattern of consumer spending in the current year is the surge in spending on non-durables. The revival of automobile sales has been a distinctive mark of industrial grow in the current year,” the report further states.
