2004-05 growth seen at 6.4-7.4%

While the forecasts for the current year's gross domestic product growth vary between 6.4 and 7.4 per cent, economists agree that agricultural growth will remain flat and manufacturing will pick up despite the fears of rising interest rates.

On inflation, the fears are overstated, they feel. According to them, the average inflation in the fiscal is expected to be in the 4.5-5 per cent range.

The manufacturing sector is on a song and has been growing over 7 per cent for the last two years, says Saumitra Chaudhuri, economic adviser, at ICRA.

Consumer durable goods are doing well and investment demand is also picking up, indicating a broad-based upturn in the manufacturing sector. "With the investment cycle picking up, uptake and manufacturing demand will continue to be strong for the next two years," he adds.

"At 7.3 per cent growth in 2003-04, the manufacturing sector has not grown the way it should have," says Pranab Sen, adviser in the Planning Commission.

Next year, he says, the manufacturing sector can grow around 8.5 per cent. Interest rates will not make much of a difference, but political uncertainty can take a toll on the growth, he adds.

A well-dispersed monsoon can yield 3 per cent growth in agriculture, says Sen. According to the indications so far, a decent pre-monsoon period and good ground moisture mean that agriculture can turn in this growth rate, on top of the 9 per cent reported in 2003-04, he feels. For the year as a whole, Sen predicts GDP growth of 7.2-7.4 per cent.

Chaudhuri, however, is pessimistic on agriculture. "We are most likely to see a small contraction of about 1.5 per cent in this sector. A good monsoon will result in a 2 to 2.5 per cent growth," he says.

As of now, his estimate for GDP growth is 6.4 per cent and any revision, he says will be possible only after the second quarter.