NCAER projects 8.3% growth in 2007-08

India's growth momentum is likely to slow down marginally in the current financial year, which started in April, to 8.3 per cent from 9.2 per cent, independent think-tank National Council of Applied Economic Research said today.

NCAER said it expected growth in both the industry and services sectors to moderate to 8.7 per cent and 9.9 per cent in 2007-08 from 10 per cent and 11.2 per cent, respectively, a year ago.

Agricultural growth in 2007-08 is likely to be marginally lower at 2.6 per cent compared with 2.7 per cent last year, it said. "The overall scenario that emerges for 2007-08 is that of slower output growth, but still in the same band of 8-9 per cent," NCAER said in its quarterly review of the Indian economy. The Indian economy has grown at an average 8.6 per cent over the last four years.

The moderation in growth is in line with other forecasts. Most analysts expect continued monetary tightening to moderate growth in the current fiscal. The Reserve Bank of India has raised banks' cash reserve ratio and key short-term benchmark rate by 150 basis points each to tame inflationary expectations.

India's March-end inflation rate was 5.74 per cent, higher than the central bank's target of 5-5.5 per cent. The think-tank has projected the average Wholesale Price Index inflation at 5.3 per cent, the same as last year.

NCAER sees the growth in exports and imports to decelerate in the current financial year on slower growth in world output. It has projected exports and imports to grow 15.7 per cent and 18.5 per cent, respectively, in the current year compared with 17 per cent and 25 per cent last year.

The current account balance is likely to be in surplus this fiscal on account of strong growth in net invisibles, it said. NCAER has projected a current account surplus of 1.3 per cent of gross domestic product compared with deficit of 1.7 per cent last year.