Professional Forecasters' Survey

The Indian economy is projected to grow at 7.7 per cent in the current fiscal, according to the results of the quarterly survey of professional forecasters on major macroeconomic indicators conducted by RBI in September. Conducted through a questionnaire responded to by 23 forecasters, the survey contains detailed forecasts of GDP growth, inflation, savings, capital formation, consumption expenditure, export, import, interest rates, money supply, credit growth, stock market movements, corporate profit etc.

Salient features
Forecasters have revised their real GDP growth rate forecast downwards to 7.7 per cent for 2008-09 and 7.5 per cent in 2009-10. The highest 50.8 per cent probability was assigned to GDP growth range of 7.5-7.9 per cent for the year. For 2009-10, the highest 35.4 per cent probability was put for 7.5-7.9 per cent growth range followed by 34.6 per cent for 7-7.4 per cent. Real GDP growth originating in industry for 2008-09 has been revised downwards to 7.0 per cent from 7.5 per cent in the earlier survey. The growth forecast for agriculture and services sector remains the same at 3 per cent and 9.5 per cent respectively.
The proportion of domestic saving to GDP is indicated to be 34.8 per cent in 2008-09. Gross domestic capital formation would contribute 36.3 per cent to real GDP and gross fixed capital formation 33.5 per cent. The forecasters have revised the growth rate of private final consumption expenditure to 7.4 per cent against 7.1 per cent in the last survey.
The profit growth of corporate sector in 2008-09 has been revised upwards at 18 per cent from 16 per cent in the last survey. The growth is expected to improve to 18.5 per cent in 2009-10.
Broad money (M3) is expected to increase by 19 per cent and bank credit 22 per cent in 2008-09.
Most of the forecasters have expected rupee to depreciate vis-à-vis US dollar and reach 44.3 per one US dollar in 2008-09. Overall BoP is forecast to be $12.4 billion, down from the earlier estimate of $23.1 billion. Forecasters have put net surplus under invisibles during 2008-09 at $85.5 billion.
The median estimates for WPI inflation on a year over year basis in the third and fourth quarters are revised upwards to be 12.3 and 9.7 per cent respectively. Inflation is expected to come down moderately in the first half of 2009-10. The inflation based on CPI-IW is forecast at 8.8 per cent and 8.5 per cent, respectively in the last two quarters of the current year.

Long-term forecasts
Long-term forecasts for real GDP for the next five years are placed at 8.0 per cent. For the next 10 years, the GDP is expected to grow at 8.1 per cent, revised downwards from 8.5 per cent in the last survey. Over the next five years, the forecasters expect WPI inflation to be 6 per cent and CPI-IW inflation 5.9 per cent. Over the next 10 years, both WPI and CPI-IW based inflation are expected to be 5 per cent.
Caveat: Introduced by RBI from the quarter ended September 2007, the forecasts are of professional forecasters and not of the RBI, the apex bank has emphasised.
(For detailed results, see http://rbi.org.in/scripts/PublicationsView.aspx?id=10794#-survey)