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CMIE sees economy, agri output dipping in'02-03

India's economic growth is likely to slow down in the current financial year, an independent forecaster said on Tuesday.

Weakness in the farm and services sectors would combine with moderate expansion in the industrial sector to pull India's GDP growth rate in 2002-03 (April-March) to 4.5 per cent from an estimated growth of 5.7 per cent last year, the Centre for Monitoring Indian Economy said.

That is lower than the Reserve Bank of India's projected GDP growth of 6.0-6.5 per cent and the Asian Development Bank's forecast of 6.0 per cent. The government has not made any projection.

The CMIE forecast the agricultural sector to expand by two per cent in 2002-03 against an estimated growth of 7.2 per cent last year.

About two thirds of India's more than one billion people depend directly on agriculture for their livelihood in the world's second most populous nation.

The CMIE forecast the industrial sector to grow by about four per cent against 2.7 per cent last year while the services sector was projected to expand by 6.5 per cent against 6.6 per cent.

The farm and industrial sectors contribute about 25 per cent each to GDP, while the services sector accounts for the rest.

India's economy is ranked the world's 13th largest by 2000 GDP size, according to the World Bank.

In dollar terms, it vies with South Korea for the position of third largest economy in Asia, behind giants Japan and China.

The CMIE said the past year was India's most difficult since facing a balance of payments crisis in 1990-91 and it expects the situation to deteriorate further.

"We believe the economic scenario would change in 2002-03 for the worse," it said.

The CMIE said it based its forecast on the current year's government spending, outlined in the annual budget, and the central bank monetary policy, which it said were broadly in line with the trend witnessed in recent years.

"These would not be able to provide any more spurt to growth than they have been able to do so in the past," it said. Indian farm output growth seen slowing this year

Indian farm output is likely to grow much more slowly this year than it did the previous year as the country's production of foodgrains has plateaued amid falling prices, an independent forecaster said on Tuesday.

The growth rate of agricultural commodities output is expected to slip to 1.5 per cent in the current year to March 2003 from 7.2 per cent last year, the Centre for Monitoring Indian Economy said in its most recent monthly review.

"Rice and wheat production is expected to stagnate at the previous year's levels," it said.

Last year, India produced a record high of 90.75 million tonnes of rice and 73.5 million tonnes of wheat, up seven per cent from the previous year, according to government estimates.

Farmers are unlikely to increase cultivation of these grains also because their prices, which have dropped over the past two years, are expected to remain weak, the forecaster said.

The wholesale price of rice fell 2.2 per cent in 2000-2001 and a further 0.2 per cent last year, while that of wheat increased 1.2 per cent in 2000-2001 but dropped 0.8 per cent last year, it said.

Other crops

Oilseed production is likely to grow by six per cent this year, lower than the 15 per cent growth last year.

Groundnut output is expected to grow by 11 per cent against 16 per cent last year, the forecaster said.

The output of cotton, tea, spices, fruits and vegetables is likely to rise marginally, but sugarcane production is expected to stagnate, it said, but did not give figures.

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