CMIE predicts a 9.4% growth

India's economy would continue to clock a robust over 9 per cent growth in FY 09, the Centre for Monitoring Indian Economy (CMIE) said in its monthly report.“We had predicted a growth of 9.1 per cent in our first forecast in February 2008, which was revised up to 9.5 per cent in June. We now believe that economy would grow by 9.4 per cent in FY 09,” CMIE said.This marginal change is because of a downward revision in its estimate of the growth of the industrial sector, it said.CMIE had predicted a growth of 11.4 per cent in industry.However, following a slowdown in the output of a few industries, “We now believe that the industrial sector would grow by 11.1 per cent and not 11.4 per cent as predicted earli er,” the report said. Prominent industries that have warranted a decline were cement, sugar, glassware and milk powder, CMIE said. In fact, two official documents released earlier also indicated that the Indian economy was headed for a slowdown in FY 09.
The Reserve Bank of India (RBI) had predicted that the GDP would grow by 8-8.5 per cent in FY 09. But, RBI governor Y V Reddy brought this down to about 8 per cent. The prime minister’s economic advisory council (EAC), on the other hand, projects that the economy would grow by 7.7 per cent. The EAC expects to see both investment and consumption expenditure growth to slow down a bit.
CMIE’s relatively upbeat forecast reflects two departures from the observations made by other forecasters.First, CMIE considers the Index of Industrial Production (IIP) to be faulty and does not consider its sharp slowdown in Q1 FY 09 to be a reflection of the reality. Alternate sources of data indicate that the industrial sector has recovered from its recent slowdown .