RBI's Macro Economic survey revises FY10 GDP to 5.7%

The Reserve Bank has released its Macro Economic report a day before the Credit Policy.

The economic outlook has been marked by persistence of less than normal sentiments. Surveys by several agencies showed an amplified downside risk to growth. The median forecast of different agencies for FY09 GDP is down 6.6% versus 6.8%, FY10 GDP at 5.7% as against 6%. The survey forecasts moderate growth between April-June across various companies.

Business confidence during January-March declined 20.7%. The same for April-June is down 13.9%. Overall, sentiment for industries, except textiles, was positive. However, it found smaller companies were less optimistic about growth. Food, pharmaceuticals, and cement showed positive sentiment, the survey found. Corporate performance after being robust showed signs of moderation in the third quarter.

On inflation, the central bank said that the volatility in inflation in the last one year was unprecedented and feels the CPI, though declining, was high at 9.6-9.8% during January-February. The annualised month on month seasonally adjusted WPI or Wholesale price index declined since June 2008 became negative since September 2008 and remained negative in March 2009, it said.

Further, it said that the Ministry of Agriculture has set the target for food grain production for FY09 at 233 million tonne. Savings and investments are likely to be lower in FY09, the report indicated.

The Reserve Bank said the gross tax revenue in the revised estimate for FY09 is down by 8.7% than the budgeted estimate.