Eminent economists, during a panel discussion on Friday warned that India's GDP is likely to grow at a lower 5.6-6.25 per cent this year but said inflation would stabilise at 6-7 per cent in the country.
At the panel discussion on 'The Coming Investment Boom', organised by India Today, economists including Shankar Acharya, Subir Gokran and Indira Rajaraman said the slowdown in growth would mainly be due to poor agriculture growth even though industry and services are expected to do well.
"I see GDP growth rate for the current year at 5.75-6 per cent on the back of eight per cent growth in services and 7.5 per cent growth in manufacturing," Acharya, member, 12th Finance Commission, said.
Acharya said he sees agriculture growth remaining positive in the year. Predicting that the fiscal would end with a 6.5 per cent inflation rate, he said the 10-year government papers would have an interest rate of 7.5 per cent.
Indira Rajaraman, professor, National Institute of Public Finance and Policy, said GDP growth during the fiscal should be six per cent riding on eight per cent growth from the industry and services sectors. She said agricultural growth would be zero if not negative.
Inflation during the fiscal would be at seven per cent and the rate of interest of government paper would go up to 7.5 per cent, she added.
Subir Gokran, chief economist at CRISIL, said India could have a GDP growth rate of 5.6 per cent in 2004-05 with a 6.4 per cent growth of industry and 8.4 per cent in services coupled with 2.5 per cent growth in agriculture. Inflation would hover around six per cent with rate of interest on 10-year government paper at 6.5 per cent.