RBI pegs GDP growth at 6.5%

The overall gross domestic product growth for 2004-05 is expected to be 6-6.5 per cent, taking into account risks of high and uncertain oil prices and changes in international liquidity environment, says RBI's report on currency and finance 2003-04.

On the current reckoning, as the mid-term review indicated, the overall GDP growth is expected to 6-6.5 per cent, placing India as among the faster growing economies in the world this fiscal, the RBI said.

Even though global environment remained uncertain due to rising crude prices and imbalances, the growth prospects of the Indian economy remained strong, the report said.

Adherence to the envisaged targets under the Fiscal Responsibility and Budget Management Act, 2003, would release more resources for the productive private sector investment leading to additional employment opportunities to enable the Indian economy to realise its potential, it added.

The report said the balance of payment position remained comfortable while the strong growth in merchandise exports was supplemented by exports of services and buoyant remittances.

On the agricultural front, the rabi crop is expected to benefit from the north-east monsoon which has been satisfactory so far.

The increase in bank credit to industry, buoyancy in the IT sector, significant growth of the telecom and transport sectors and strong tourist inflows are expected to add further impetus to the growth of the services sector, it said.