Economic think-tank NCAER has revised its projections for economic growth to 7.9 per cent for 2006-07, compared to 7.7 per cent made in April due to likely higher growth in industry and services sectors.
National Council of Applied Economic Research, in its quarterly review of the economy released on Thursday, also raised its forecast for average wholesale price index-based inflation to 4.6 per cent for the current fiscal from the earlier assessment of 4.3 per cent, especially due to surging crude oil prices in the international market.
The review also projected higher fiscal deficit at 4.1 per cent of GDP for this fiscal against the earlier forecast of 3.9 per cent and increase in current account deficit to 1.8 per cent of GDP against 1.7 per cent assessed in April.
The economic think tank projected higher growth in industry and services sectors by 0.2 per cent each to 8.5 per cent and 9.8 per cent, respectively, despite the business confidence index (BCI) for June, 2006, dropping by eight per cent over the previous quarter.
The BCI declined due to a perceived deterioration of the investment climate and overall economic conditions. But unlike the drop in investment sentiments of domestic firms, the foreign direct investment (FDI) flow is increasing and it constitutes an important push to investment activity, NCAER said.
In the first four months of the current calendar year, FDI inflow was $2.5 billion compared to less than $ one billion in the same period of last year.
The outlook for the services sector growth remains buoyant, the review said, adding that the telecom sector continues to be dynamic and air traffic, railway freight and port traffic growth significant.