RBI survey pegs growth at 7.9%, earnings growth at 12.2% for BSE cos

Forecasters engaged by the Reserve Bank of India have revised their real gross domestic product or GDP growth rate for India downwards to 7.9 per cent for 2011-12 from 8.2 per cent in the last survey. They predict wholesale price inflation to hover around 7 to 7.9 percent. The survey expects corporate earnings growth to slow down considerably to 12.2 percent. The Central government’s fiscal deficit is forecast at 5.3 percent of GDP in 2011-12, revised upwards from the last survey. Projections for agriculture, industry and services growth are 3.5 percent, 7.4 percent and 9.0 percent respectively. For agriculture, there is an upward revision and for Industry and services, there is a downward revision from the previous round. The combined gross fiscal deficit of central and states is placed at 8.0 percent of GDP in 2011-12, revised upwards from 7.6 percent in the last survey. In the light of the tough inflation situation and rising fiscal deficit, interest rates are likely to stay high. The forecasters expect repo rate to be at 8 per cent in end-March 2011-12, revised upwards from 7.25 percent projected in the last survey. For 2011-12, the domestic saving rate is forecast to be 34.2 percent, and the rate of gross domestic capital formation at 35.5 percent, both revised downwards from the previous survey. The rate of gross fixed capital formation is projected to be 30.4 percent, revised downwards from last survey. The forecasters have predicted private final consumption expenditure at current prices to grow at the rate of 16.0 percent, revised marginally upwards from last round. The results of the quarterly Survey of Professional Forecasters on major macroeconomic indicators of short to medium term economic developments was conducted among 30 forecasters covering component-wise detailed forecasts of GDP growth, inflation, savings rate among other factors. The Reserve Bank has been conducting this survey on a quarterly basis from the second quarter ended September 2007. It disseminates the survey results through its website on a regular basis.

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