India may scale down GDP growth projection

Amid rising global commodity prices and high inflation, the government is likely to scale down India's GDP growth projection for the 2011-12 financial year next month from 9 per cent estimated in February, chief economic advisor Kaushik Basu on Friday said.

"This year because of changing global scenario and many other important organisations having downgraded India's growth rate, we have decided that we would go back and take another look at our (GDP) numbers in mid-June," Basu told reporters.

Usually the government takes stock of the economy in its mid-term review in October.

IMF has pegged India's economic growth at 8.2 per cent in 2011, while RBI sees it at 8 per cent in the fiscal.

When asked about his estimates for the GDP growth, Basu said: "There would be some downward correction. My expectation is that it will be a small change."

Finance Minister Pranab Mukherjee had pegged the GDP expansion at around 9 per cent in his Budget speech.

However, while attending a Asian Development Bank's meet in Hanoi, he said that any further rise in crude prices may dent India's economic growth to 8 per cent in 2011-12.

India's GDP growth rate for 2010-11 has been pegged at 8.6 per cent, while it was 8 per cent in the previous fiscal.

Average price for Indian basket of crude oil in the last fiscal was $85.09 per barrel, but current fiscal's average price stands at $110.55 per barrel.

Headline inflation stood at 8.66 per cent in April, much above the Reserve Bank's comfort level of 5-6 per cent. Food inflation was 8.55 per cent for the week ended May 14.

Earlier this week, Revenue Secretary Sunil Mitra had expressed apprehensions that the high crude oil prices and monetary tightening regime of the Reserve Bank could adversely impact the tax collection target for this fiscal.

Besides, the continued sovereign debt crisis in some of the European nations is also a cause of concern for the government. Europe accounts for a significant chunk of India's exports.