19 Nov 2008 4:29 PM

GDP growth rate for 2008-09 revised downwards by CMIE

We had anticipated a slowing down of the growth because of the crisis. However, the data has turned out to be a little worse than our expectations.

A detailed working with the data of individual sectors indicates that the industrial sector would slow down more than we had anticipated last month. Our forecast for industrial production growth stands revised to 6.3 per cent compared to 8.3 per cent predicted earlier. Our forecast for electricity has dropped from 6.3 per cent to 4.3 per cent. That for mining is down from eight to 7.5 per cent and manufacturing has been revised from 8.5 tp 6.4 per cent.

Our forecast for agriculture remains unchanged at 3.2 per cent. Crop production is projected to grow by 2.5 per cent, livestock by 5.5 per cent, forestry by 1.5 per cent and fishing by 3.8 per cent in 2008-09.

The sudden and sharp fall in indicators of transport services - railways and airways warrant a small correction in these estimates. We have therefore reduced our forecast for trade, hotel and transport services from 10.6 per cent to 10 per cent. This leads to a small revision in our estimate for services sector, which is now projected to grow by 10.1 per cent.

Real GDP is thus projected to grow by 8.2 per cent in 2008-09. The third quarter would see the major impact of the slowdown. We expect a recovery in the last quarter of the year.

Sonal Bhatia
bsonal@cmie.com