6% GDP growth well in sight, says RBI

Reserve Bank of India (RBI) Governor YV Reddy today said an economic growth of 6.0-6.5 per cent in the current fiscal will be achieved comfortably. He also said an inflation forecast of 6.5 per cent for the end of March was "valid".

Commenting on the foreign exchange reserves, Reddy said nearly 60 per cent of the reserve accretion in the current fiscal has come in two months "" November and December "" indicating volatility in portfolio flows.

The foreign exchange reserves increased by $18.2 billion, from $113.0 billion at the end of March, 2004, to $131.2 billion at the end of December, 2004.

Reiterating that uncertainties of oil prices are likely to continue albeit in a muted fashion, the RBI governor said the current account of the balance of payments, which was in a surplus of $3.2 billion in the first quarter, turned into a deficit of $6.4 billion, reflecting not only a surge in trade-deficit but also moderation in the invisibles surplus.

Reddy said the trade deficit on the balance of payments basis doubled to $12.3 billion in the second quarter from $5 billion in the first "" reflecting a growth in imports.