New Delhi, April 18: India Inc believes the country’s GDP growth during the current year will be somewhere between 5.5 per cent and 6.5 per cent, which is a lot better than the forecasts made by the World Bank and Escap over the last few weeks.
Omkar Goswami, chief economist of the Confederation of Indian Industry, today said the apex chamber believed GDP growth would be between 5.5 per cent and 6.5 per cent, depending on the farm sector’s performance.
A normal monsoon, which is a possibility, could see growth rates soaring while a less than normal monsoon could see a lower growth forecast coming true, said Goswami, who earlier taught at the Indian Statistical Institute.
Addressing a seminar organised here by the Confederation of Construction Products and Services (CCPS), he said industry, which has a weightage of 26 per cent in GDP calculations, was likely to repeat or improve upon its year 2002-03 performance, when it posted a 6.5 per cent growth. Similarly, the services sector, which carries a 50 per cent weightage and posted a 7.5 per cent growth rate during the fiscal gone by, would either equal or better its results.
The farm sector, which had shown a 2 per cent shrinkage, was likely to post positive growth figures this year. “Either way, this growth rate would make India and China the two fastest growing giant economies in the globe,” Goswami said.
Yesterday, United Nation’s Economic and Social Survey followed up on an earlier World Bank warning that war in Iraq would impact India’s economic growth, by reducing the country’s GDP growth estimates from 6 per cent to 5.1 per cent.
Goswami also said his calculations showed the up-market segment of the Indian marketplace, represented by the top 20 per cent families by income, today numbered about 209 million and spent nearly $ 157 billion a year.
“This is likely to go up to $ 230 billion spent by 236 million by year 2010, if the median growth rate stays at 6.5 per cent. In case, it falls to 5.5 per cent then the market size would still be an impressive $ 212 billion,” he said.
“This top 20 per cent layer would also be saving about $ 110 billion by 2010 compared with $ 72 billion now if GDP growth stays put at 5.5 per cent. If the GDP growth rate stood at 6.5 per cent, the size of the saving kitty would be $ 118 billion,” the chamber’s chief economist said.
Goswami said the size of the savings kitty put together by the top households was important as this would determine investments in areas such as stock of houses, a figure important for the construction industry as well as for the newly floated body CCPS, a federation of construction industry manufacturers.