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Global changes to pull GDP down to 7.1%: PM panel

January 23, 2009 17:28 IST

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Painful adjustments to the abrupt changes in the international economy will pull down India's economic growth to 7.1 per cent this fiscal, down from 7.7 per cent forecast earlier, the Prime Minister's Economic Advisory Council said on Friday.

Even in the coming fiscal, the growth is likely to be in the range of 7 to 7.5 per cent, the PM's panel said, adding that inflation will moderate to four per cent by February-end.

The gross domestic product growth was 9 per cent in 2007-08 and inflation has already declined to below six per cent in January from the peak of 12.91 per cent in August 2008.

The combined fiscal deficit of the Centre and states, on account of fiscal stimulus and tax concessions given to the industry to combat slowdown, will be in excess of 10 per cent of GDP during the current financial year.

The slowdown, it said, was 'caused by painful adjustments to abrupt changes in international economy. . .(following) financial meltdown and deeper than anticipated recession in the advanced industrial countries in the second half".

As regards inflation, the panel said, "Expected decline in consumer prices is unlikely to match that in the wholesale prices."

The wholesale prices-based inflation for the week ended January 10 stood at 5.6 per cent.

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