'8-8.5% GDP not impossible'

MUMBAI: The Reserve Bank of India���s estimate of a growth of 8-8.5% for this fiscal could well be an indicator that some projections of a major slowdown in the Indian economy may well be off the mark. Quite a few economists had hinted that there could be a deceleration in economic growth in FY09 compared to the growth of 8.7% in FY08. The latest survey conducted by RBI among professional economic forecasters has indicated that the economy could grow at an average of 8.1% for this fiscal.

In fact, some forecasters had even pegged the GDP growth in the range of 7.5-7.8%, one percentage lower compared with last fiscal. Such a bearish outlook is on account of high domestic inflation coupled with monetary tightening measures, a slowdown in industrial production and the turmoil in global credit market adversely affecting global economic growth. Despite the presence of these downside risks, RBI is confident about the growth momentum in the Indian economy.

In the annual policy document it has clearly mentioned that ���the expected decline in world GDP growth in 2008 compared to the previous year could temper the prospects of growth in the industrial and service sectors at the margin although the underlying momentum of expansion in these sectors is likely to be maintained. In view of these factors, overall, for policy purposes, real GDP growth in 2008-09 may be placed in the range of 8.0 to 8.5%.���

However, the estimation is based on a few underlying assumptions like global financial and commodity markets and real economy is unlikely to change much from the current scenario and domestically and that the monsoon would be normal this year. Crisil director and principal economist, DK Joshi, feels the latest GDP growth targets set by RBI are realistic and achievable.