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NCAER forecasts 6.5-6.7 p.c. GDP growth

NEW DELHI, FEB. 19. With an all round upturn in economic cycle except in agriculture, the economic think tank National Council for Applied Economic Research (NCAER) has forecast India's gross domestic product growth rate at 6.5 to 6.7 per cent for this fiscal.

The output of manufacturing sector looks extremely bright and it is indeed amazing that even an uneven monsoon could not deter the economy from registering robust growth during 2004-05, the NCAER said in its latest quarterly review, 2005.

According to the Central Statistical Organisation estimate, the GDP grew at 7 per cent, driven largely by excellent growth recorded in the industrial and services sector. Industrial production-manufacturing (IIP-M) recorded an 8.9 per cent growth during April-November of 2004-05. Exports and imports during April-December of this fiscal grew at 23.4 per cent and 33.6 per cent, respectively. More importantly, exports of manufactured goods, including chemicals, textiles, ready-made garments and gems and jewellery accelerated.

While the world's growth engine, the U.S., is expected to slow down in 2005, the European Union growth is expected to gain momentum, the NCAER said. "Thus the industry can look forward to the export opportunity that Europe is likely to throw up during 2005," the quarterly review said.

Central tax collection and railway freight traffic earning during the first eight months of this fiscal also point towards robust growth during 2004-05, it said. Revenue from corporation tax grew by 53 per cent, while excise revenue rose 10.6 per cent during April-November 2004, the review said.

The healthy growth in goods traffic translated into an 8.9 per cent increase in railway freight earnings during April-November, the council said.

Other indicators also reflect an upturn in economic cycle and it appears that there is no looking back, the think tank said. This led to a rise in business confidence index by 6.5 percentage points to 142.5 during the quarterly survey of January 2005 by the NCAER over the survey of October 2004.

The trend of rise in business confidence index in four dimensions — overall economic conditions, financial position of the firms, investment climate and capacity utilisation — continued, according to the quarterly review for 2005. While the indicators of overall economic conditions and the financial position of the firms are up by 5.9 and 0.7 percentage points respectively, the indicator of investment climate and capacity utilisation are up by 5.2 and 1.1 percentage points respectively. "This is indicative of the fact that consolidation witnessed in business optimism in this round is also broad based," the think tank said.

In fact, this time around, a little over two-thirds of the respondents believe that overall economic conditions and financial position of their firms would improve during the next six months, the NCAER said.

In the case of capacity utilisation, more than 95 per cent respondents reported that they had reached optimal level, the review said. — PTI

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