Credit Suisse ups GDP growth to 6.2 per cent

MUMBAI: Revising upwards its forecast on India's GDP growth to 6.2 per cent, global financial services major Credit Suisse today said the Reserve Bank of India may start increasing interest rates from the first quarter of calendar year 2010.

The Reserve Bank of India may be forced to increase (rates) to ensure that price pressures do not increase, Credit Suisse economist, Cem Karacadag, told reporters here.

"The scope for expanding fiscal policy had exhausted and the RBI was unlikely to hike interest rates till the end of this year," Karacadag said.

India's economy may grow at a rate of 6.2 per cent in the current fiscal against the 4.9 per cent as projected by Credit Suisee earlier, he said.

There are limited policy options, he said, adding that "fiscal and monetary policy needs to be tightened, if not now than later."

On inflation, Karacadag said that it may rise on the back of higher commodity prices and the benchmark wholesale price index (WPI) could rise to 6.4 per cent by the end of the first quarter.

The RBI may also effect an increase in the cash reserve ratio from the current five per cent to undo liquidity expansion by March next year, he said.