Crisis to have 'significant impact', derail 11th Plan: IEG
The tides of global financial turmoil would have "significant impact" on Indian shores and would pull down its economic growth rate to seven per cent in fiscal 2009, an economic think tank has said.
By PTI |
NEW DELHI: The tides of global financial turmoil would have "significant impact" on Indian shores and would pull down its economic growth rate to seven per cent in fiscal 2009, an economic think tank has said.
"The impact of this financial crisis on India is also going to be significant as India is not decoupled with the global macro economic behaviour," the Institute of Economic Growth (IEG) said in its monthly monitor, adding the growth will slip to seven per cent from nine per cent in the previous year.
The impact of global meltdown, the report said, will also "spill over to the next fiscal... and would derail the 11th Plan growth target of nine per cent".
Reserve Bank in its mid-term monetary policy review also revised its growth forecast to 7.5-8 per cent from its earlier projection of eight per cent for 2008-09, in view of the global crisis.
Prime Minister Manmohan Singh had stated that India will achieve a growth rate of 7.5 per cent to eight per cent this year despite the current economic global turbulence.
Referring to the impact of global crisis on India, the IEG report said, the flight of foreign capital has created liquidity problem: "In the medium term this is expected to pull down industrial output growth which is already in a slowdown phase."
Major impact, it said, will be felt on the sectors like trade, hotels and insurance, etc, which is "strongly linked" with the global economy.
The downward revision in GDP forecast, it said, "is due to expected slowdown in the services sector output growth, in which some of the sectors are largely dependent on global economy (US in particular) that is facing a recessionary threat."
"The impact of this financial crisis on India is also going to be significant as India is not decoupled with the global macro economic behaviour," the Institute of Economic Growth (IEG) said in its monthly monitor, adding the growth will slip to seven per cent from nine per cent in the previous year.
The impact of global meltdown, the report said, will also "spill over to the next fiscal... and would derail the 11th Plan growth target of nine per cent".
Reserve Bank in its mid-term monetary policy review also revised its growth forecast to 7.5-8 per cent from its earlier projection of eight per cent for 2008-09, in view of the global crisis.
Prime Minister Manmohan Singh had stated that India will achieve a growth rate of 7.5 per cent to eight per cent this year despite the current economic global turbulence.
Referring to the impact of global crisis on India, the IEG report said, the flight of foreign capital has created liquidity problem: "In the medium term this is expected to pull down industrial output growth which is already in a slowdown phase."
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Major impact, it said, will be felt on the sectors like trade, hotels and insurance, etc, which is "strongly linked" with the global economy.
The downward revision in GDP forecast, it said, "is due to expected slowdown in the services sector output growth, in which some of the sectors are largely dependent on global economy (US in particular) that is facing a recessionary threat."
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