GDP to grow by 6.75-7% in FY06: Crisil

Rating agency Crisil said the economy is expected to grow by 6.75-7% during 2005-06 and inflation is likely to hover around 5-5.5%.

"Overall, we expect India's GDP to grow by 6.75-7% during 2005-06," Crisil chief economist Subir Gokarn said at a post-budget meeting.

Crisil expects agriculture to grow by 3.5%, industry by 7 and services by 8.5% next fiscal.

Referring to the budget proposal for boosting manufacturing and infrastructure sector, Gokarn said the industrial growth has been estimated higher at 7% for the next fiscal.

On inflation, Subir said "this budget will not have much impact on inflation."

Also, the inflation scenario would be far more dependant on sectors like domestic capacity utilisation and global commodity prices, Subir said projecting 5-5.5% inflation.

Crisil estimated a higher fiscal deficit of 4.5-4.7% of GDP as against the budget target of 4.3%.

Gokarn said there might be revenue shortfall even though expenditure may be on target.

"Expenditure has been less this fiscal from the budgeted amount. Going by this trend, there is no risk in government meeting the fiscal deficit target of 2005-06," Gokarn said.

Expecting a hike in market borrowing by Rs 8,600-12,400 crore next fiscal, Gokarn said "there may be a moderate hardening of interest rate. We expect the benchmark 10-year government papers yield at 7.25% by the end of the next fiscal.