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India 2006-07 GDP growth seen at 7.7%: Thintank

According to the NCAER India's economic growth could slow to 7.7% in 200-07 from an estimated 8.1%.

india Updated: May 23, 2006 11:45 IST

India's economic growth could slow to 7.7 per cent in the fiscal year to March 2007 from an estimated 8.1 per cent expansion in the previous year because of high oil prices, a leading economic thinktank said.

All the three sectors -- agriculture, industry and services -- are expected to witness lower growth rates, the National Council for Applied Economic Research (NCAER) said in its monthly report on Monday.

It forecast factory output to rise by 8.3 per cent in 2006/07, compared with 9 per cent in the previous year.

"Domestic oil prices will be revised upward, and this along with hardening of interest rates, would result in marginal decline of GDP growth in 2006/07," the thinktank said in its monthly report.

India, which imports about 70 percent of its oil, has not increased domestic fuel prices since September last year even though world oil prices have risen sharply to about $70 a barrel.

Prime Minister Manmohan Singh said on Monday the government cannot keep subsidising energy consumption at the current level.

Farm output, which contributes a fifth of GDP, is seen growing at 2.1 per cent this year against 2.3 per cent in 2005/06, NCAER said, citing slightly below normal monsoon rains forecast by the weather department.

The services sector, with 50 per cent share of GDP, is expected to expand by 9.6 per cent this year compared with 9.8 per cent in the previous year, it added.

The think-tank expects inflation to be contained at 4.3 per cent this year against 4.4 per cent in 2005/06.

It projected India's fiscal deficit to drop to 3.9 per cent of GDP in 2006/07 from 4.1 per cent last year.

Exports are slated to grow by 18.9 percent against 24.7 per cent in the previous year, while imports could expand 25.2 per cent versus 31.5 per cent, it added.

First Published: May 23, 2006 11:45 IST