PM expects GDP growth to decline to 7-7.5% next fiscal

Muscat: The global financial crisis is expected to hurt the Indian economy more than previously anticipated, with Prime Minister Manmohan Singh on Sunday projecting gross domestic product (GDP) growth to decline to 7-7.5% next fiscal.
Although the government and the Reserve Bank of India (RBI) are battling contraction in credit growth, Singh said the fundamentals of the economy were strong and banks were safe, and promised accelerated efforts to prop up growth.
“Due to the current international economic and financial situation, our growth rate may come down somewhat next year. However, we still hope to achieve a growth rate of 7-7.5% next year,” he said, addressing the Indian expat community here.
RBI had last month said Inida’s $1.2 trillion (Rs57.36 trillion) economy may grow at 7.5% this fiscal as opposed to 9% in 2007-08. The rate in 2008-09 would be the weakest since 2005.

Read more at Livemint

US financial crisis may hit India's exports in Q4: Deloitte

NEW DELHI: Country's exports, including BPO services, software and financial services
exports, are likely to be hit by the global meltdown in the fourth quarter of 2008, says a report by global research firm Deloitte. "The ongoing slowdown in the US economy will likely to affect the future growth in India's exports. Experts predict that US businesses would likely either reduce outsourcing or withhold expansion plans," the report Deloitte Global Economic Outlook for the fourth quarter of this year said. Consequently, as a result of the financial crisis, the BPOs, financial services and other software exports contributing to about 2 per cent of India's GDP are likely to be affected, the report said. Software industry body NASSCOM has also predicted that there would be a significant impact of the global crisis on the Indian BPO sector. The financial turmoil and recessionary tendencies in major economies have already impacted India's export growth, which slowed to 10.4 per cent in September even as the country increased its imports by 43.3 per cent over September 2007.

Read more at The Economic Times

Liquidity management on top of RBI`s agenda

Liquidity management is expected to top the agenda in the first quarter review of the monetary policy by the Reserve Bank of India (RBI) tomorrow.

The immediate task at hand for the RBI would be to convey whether it is still in the tight monetary policy mode, irrespective of an extended pause in interest rate increases.

Flush liquidity, apart from softening short-term money market rates, poses inflationary risks and also threatens to push credit growth back towards the peak of around 30 per cent witnessed in the previous three years.

The liquidity has been largely on account of the RBI’s purchases of dollars from the market to check the rupee’s sharp rise. Though foreign fund inflows into equities have remained strong, overseas borrowings and foreign direct investment have equally contributed to a glut in inflows.

Read more at Business Standard

Lehman sees GDP growth at 10% in '07-08

India's economic growth rate will touch nearly 10 per cent in the next fiscal year ending in March 2008, driven by robust investments and exports, a senior Lehman Brothers economist said.

"You have got rising incomes, very strong credit growth still, positive wealth and confidence effects from the high asset prices, that is countering what is happening on the monetary policy front," Rob Subbaraman, Lehman's chief economist for Asia, excluding Japan, said in an interview this week.

The US investment bank forecasts the Indian economy to grow at 9.9 per cent in the fiscal year that starts on April 1.

Subbaraman said expansion would be boosted by manufacturing.

Data on Monday showed industrial production rose an annual 10.9 per cent in January and manufacturing, which represents more than three-quarters of industrial output, grew 11.6 per cent.

Read more at Financial Express