The National Council of Applied Economic Research (NCAER) has projected a real GDP growth rate of 6.2 per cent incase of a normal scenario without the war taking place and between 5.2 per cent and 5.1 per cent in the case of war. According to the study, agricultural output is assumed to grow at 4 per cent incase of a normal scenario and 2per cent incase of somewhat adverse monsoon situation. Industry is expected to grow by 6.6 per cent in normal conditions and by 5 to 5.5 per cent incase of war. Services are expected to increase by 6.6 per cent in normal conditions which is marginally better than 6.4 per cent growth projected in the case of war.The study states that prices are already on an uptrend and it is projected to grow at 5.5 per cent on an average in the coming year. In the case of war the inflation would cross 8 per cent. The gross fiscal deficit of the centre net of small saving is projected to be 6.15 per cent in normal conditions and around 6.4 per cent in war conditions.A current account surplus of nearly 1 percent is projected for 2003-04, keeping in view the foreign exchange reserves. However, this is expected to go back to a deficit in case of a war. The major thrust of the macro economic simulations in this forecast is dependent on investment sentiment, which is dependent on the budget to a major extent and also on the possibility of a war in the very new future, the study states.War in Iraq will lead to a reduction in private placement, decline in exports and imports, lower flow of invisibles having implication on current account balances.
