NCAER revises GDP forecast to 8.5%

The National Council of Applied Economic Research (NCAER) has raised the gross domestic product (GDP) forecasts for the current fiscal a tad higher at 8.53 per cent, as compared to its projection in April at 8.3 per cent. In its latest quarterly review of the economy, the Council said the increase is on account of the projected improvements in the growth of all the three sectors of the economy, but more particularly in the cases of agriculture and industry.For agriculture, the improved rainfall scenario provides the impetus for acceleration in output growth and in the case of industry, it is essentially the higher foreign capital inflows that ease some of the constraints posed by higher interest rates and stronger rupee.While export growth is now likely to be stronger, imports are projected to rise at a faster rate of 19.2 per cent in comparison to the projected growth rate of 18.5 per cent in April.The inflation rate is projected at a slightly lower rate because a lower rise in agricultural prices generally translated into a slower inflation rate, the Council noted adding that the Centre''s fiscal deficit is projected to decline relative to GDP as GDP growth has also increased by 0.2 percentage points.The Council noted that the rupee has strengthened relative to the dollar by about 8 per cent between February 2006 and May 2007.