Reserve Bank of India Governor Bimal Jalan said on Friday that the gross domestic product growth could be between 5-5.5 per cent in the current fiscal.

Jalan was speaking at the inauguration ceremony of the Bank Economists' Conference (BECON) in Bangalore on Friday.

"The real GDP in agriculture could decline by about 1.5 per cent for the year as a whole, reflecting mainly the anticipated shortfall in foodgrains production," Jalan said.

"Industrial performance in the first half of the year appears to have shrugged off the sluggishness experienced in the preceding year. All constituent sectors of industry have recorded improvement in growth, led by manufacturing," he said.

"Significantly, the production of the infrastructure industries and capital goods growth has also revived. Export growth has turned out to be robust in the first half of the year. Non-oil imports have risen over last year's level suggesting that the slackening of domestic demand seems to be flattening out. Given these lead indicators, real GDP growth of 5-5.5 per cent during 2002-03 appears feasible," Jalan said.

He also added that the inflation outlook was uncertain due to volatile global crude oil prices, which have risen on war risks, and firm oilseeds and edible oil prices.

"Inflation is expected to remain within 4 per cent in the current year," Jalan said.

Jalan reiterated that with foreign exchange reserves rising above $68 billion, the monetary policy stance continued to be soft to provide adequate liquidity to banks to meet credit growth and investment demand.

"Monetary Policy also renewed its commitment to monitoring conditions in the foreign exchange market with watchfulness as well as flexibility," Jalan said.

Jalan says liquidity management a problem
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