ICRA sees 6.4% growth in '04-05

Contrary to the government's claim that 8 per cent economic growth could be sustained, credit rating agency ICRA yesterday pegged the gross domestic product (GDP) growth at 6.4 per cent for the current fiscal.

However, it expressed optimism that GDP growth could rise to 7-7.5 per cent in subsequent years if the new government adopted right policies and implemented them efficiently.

"It is tempting for the government to seize upon the good news of 2003-04 and argue that 8 per cent is a sustainable rate of growth and that India now stands on this trajectory. But that is patently far from being the case," ICRA said in its report "Money & Finance", released today.

Assuming a good monsoon this year along with a robust growth in industry and services sectors, ICRA said:"Even then, we still would not get a GDP growth in excess of 6.4 per cent."

"This is the combined impact of 1.7 per cent growth in agriculture sector and 7.8 per cent in non-agriculture sector (industry and services sectors)," the report said.

The rating agency expects manufacturing to grow 7 per cent and construction activities 9 per cent with services continuing to post over 8 per cent growth in 2004-05.

"If the new government adopts right policies and implements them efficiently, there is a possibility of the underlying achievable growth in non-agriculture sectors pushing up beyond 8-8.5 per cent," ICRA said.

Given that agriculture was unlikely to grow in excess of 2 per cent, the result would be an overall economic growth of around 7 per cent, the report added.