The Finance Ministry may revise downward its economic growth forecast for 2011-12. The Ministry has planned an interim review — significant since such studies normally happen well after the middle of the fiscal — of the economy by the month-end prompted by the recent volatility in global energy and food prices, which have upset earlier underlying assumptions.
“All over the world, in the light of the recent developments, there has been a revision — mostly downwards — in growth prospects. So we too might have to go in for a revision. In case we go in for a revision, it is not going to be upwards,” Dr Kaushik Basu, Chief Economic Advisor in the Finance Ministry, told presspersons here on Thursday.
The Finance Ministry usually undertakes a stock-taking of its growth forecast twice a year — the first in February (when its Economic Survey is tabled) and the second around October-November (when it comes out with a Mid-year Review of the Indian Economy).
But this time round, “we will go back to the drafting board for an interim stock taking” in the current month itself, Dr Basu said on the sidelines of an event to release the 2011 report of the United Nations' Economic and Social Commission for Asia and the Pacific.
The February Economic Survey had pegged India's GDP growth for 2011-12 at 9 per cent, with a plus or minus 0.25 percentage point deviation. On the other hand, the Reserve Bank of India and multilateral institutions such as the International Monetary Fund (IMF) and the Asian Development Bank (ADB) recently came out with lower forecasts.
The RBI, in its monetary policy announcement earlier this week, projected GDP growth for the current fiscal at 8 per cent, while the ADB revised downwards it earlier 8.7 per cent estimate to 8.2 per cent. So did the IMF, which scaled down its growth forecast for the country in 2011 from 8.4 per cent to 8.2 per cent.
The Finance Ministry, with its 9 per cent GDP growth forecast, is “increasingly feeling a bit lonely at the top”, Dr Basu admitted. The ESCAP report released on Thursday gave a projection of 8.7 per cent. “To have ESCAP come in with 8.7 per cent forecast, which is very close to our own, is a comfortable feeling,” he added.