CARE Ratings has come out with its report on the FY12 GDP numbers. These advance estimates, based on the performance so far of key sectors, study of the government expenditure and the anticipated levels of production in agriculture and industry, also help highlight the extent of slowdown in the country's economic growth momentum.
It is now certain that the government would be unable to meet the fiscal deficit target set out in the FY12 budget of 4.6% of GDP. Although, the government had envisaged borrowing to the tune of Rs.4.17 trillion for the fiscal, owing to revenue and disinvestment short falls and increases in expenditure the government announced additional borrowing to the tune of Rs.90,000 crs, taking total borrowing for the year to Rs.5.07 trillion. Going by the advance estimates of GDP at market prices for 2011-12, the fiscal deficit for 2011-12 now works out to 5.68% of GDP.
Based on the present conditions and growth levels, it is expected under conditions of stable inflation at 5%, cautious fiscal deficit with some incentives for investment, lowering of interest rates by 100-150 bps during the year, GDP growth could gradually move towards 7.5% in FY13.
- The growth in GDP at factor cost at constant prices (2004-05) during 2011-12 is estimated to be 6.9%, as against the 8.4% growth in the previous year.
- The agriculture sector is expected to grow by 2.5% this year compared with the 7% growth last fiscal.
- The manufacturing sector too is likely to see a decline in growth rate to 3.9% during 2011-12 from the 7.6% growth attained in 2010-11.
- The service sector is the only sector that is expected to register stable/marginal higher growth in the current financial year. The growth in trade, hotels, transport and communication sectors during 2011-12 is estimated to be 11.2% compared with the 11.1% growth in 2010-11
- Per capita income at constant prices (2004-05) is likely to grow at 5.6% during 2011-12 to Rs.38,005 and the same at current prices is estimated to growth by 14.3% to Rs. 60,972.
- Private consumption as show by the rate of Private Final Consumption Expenditure (PFCE) at constant prices is likely to decline by 0.6% to 58.1 % of GDP at market prices in 2011-12
- The rate of investment as seen in Gross Fixed Capital Formation (GFCF) at constant prices is estimated to decline to 31.9% of GDP at market prices in 2011-12 from 32.5% in 2010-11.
It is now certain that the government would be unable to meet the fiscal deficit target set out in the FY12 budget of 4.6% of GDP. Although, the government had envisaged borrowing to the tune of Rs.4.17 trillion for the fiscal, owing to revenue and disinvestment short falls and increases in expenditure the government announced additional borrowing to the tune of Rs.90,000 crs, taking total borrowing for the year to Rs.5.07 trillion. Going by the advance estimates of GDP at market prices for 2011-12, the fiscal deficit for 2011-12 now works out to 5.68% of GDP.
CARE's view on GDP growth in 2012-13
Based on the present conditions and growth levels, it is expected under conditions of stable inflation at 5%, cautious fiscal deficit with some incentives for investment, lowering of interest rates by 100-150 bps during the year, GDP growth could gradually move towards 7.5% in FY13.
No comments:
Post a Comment