CMIE ups GDP growth to 5.9% for FY'10

Economic think-tank CMIE has upped the economic growth forecast for India this fiscal to 5.9 per cent from its earlier projection of 5.8 per cent.        

The recovery would come on the back of a 6.4 per cent expected growth in the last quarter of FY10, Centre for Monitoring Indian Economy (CMIE) said in its latest report on the state of Indian economy. 

But poor monsoon and insufficient and untimely import to replenish the supply could have an impact on inflation, it said.

CMIE, however, forecast that the GDP growth would fall to 5.9 per cent in the current quarter (July-September) and that the economy will grow only by 4.6 per cent in Q3 FY10. 

"Fiscal 2009-10 is, therefore, likely to end with a growth of 5.9 per cent," CMIE said.      

The real GDP growth will fall further to 4.6 per cent in the October-December quarter, the lowest in the last 27 quarters and would be the worst in India's recent history, CMIE said, adding, "consumer price inflation (will) rise to its highest level in a decade to 10.5 per cent."  

According to the report, this stress in the next two quarters will be caused by the failure of the monsoon and the lack of sufficient and timely imports to repair the gap in supply.        

While the latter would not be able to stop the growth rate from falling, it could have mitigated the risk of high inflation, CMIE said.        

"We expect the economy to recover in the last quarter with a growth of around 6.4 per cent and a fall in inflation," CMIE said, adding FY10 is thus likely to end with a growth of 5.8 per cent.