RBI may further lower growth forecast for FY09: Subbarao

KOLKATA: The country���s economic growth may fall short of the Reserve Bank of India���s projection of 7.5-8% for the current financial year ending March 2009 and more pain would be in store for the next fiscal 2009-10 in terms of growth.

RBI governor D Subbarao on Wednesday indicated that the forecast might be revised downwards when RBI reviews the annual policy for 2008-09 in January 2009.

���All indications are that it (GDP forecast) may be revised downwards,��� Mr Subbarao told newsmen here after meeting the chief minister of West Bengal, Buddhadeb Bhattacharya, at the Writers��� Buildings. According to the governor, the current global financial crisis would continue to have its impact on the country, too.

In fact, RBI bosses have admitted in private conversations that they had under-estimated the impact of the crisis so far. Even today, no one seems to have a clear idea what might unfold in days to come.
The RBI governor said that the next two years would be very critical for the country. The RBI top management is in the city for its central board meeting on Thursday.

RBI had projected a 7.5% to 8% GDP growth with a downward bias for the current financial year when it announced the half-yearly policy review in October this year. It is slated to come out with the quarterly review on January 27, 2009.

Mr Subbarao said: ���The International Monetary Fund has revised the global growth forecast for emerging economies significantly. Reflecting that, we will be doing our own numbers when we do policy adjustments in January.���

The crisis is far from over and the outlook continues to be grim. Significantly, at a seminar in Hyderabad last week, Mr Subbarao had observed: ���The crisis is, by no means, over. Drawing lessons may, therefore, appear a bit premature.

There may yet be surprises. Even so, it will be instructive to put our minds together to understand how we got here and how we may avoid the mistakes and excesses in the future. It will be presumptuous on my part to anticipate the whole gamut of issues that you will bring to the discussion.���