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The central bank's views on growth expectations will form part of 2006-07 annual policy scheduled to be announced on April 18. It may also project a slowdown in the credit offtake in the new financial year.
Against a growth rate of 30-31 per cent at present, the growth rate may slow down to 22-24 per cent, as most banks will try to trim down their SLR portfolio to 25 per cent vis-à-vis 31 per cent at present.
According to banking sources, GDP growth may slow on the back of a slowdown in the government expenditure in the infrastructure sector - primarily energy. As per the data available with the RBI, most of the projects, which should have taken off, are falling behind schedule.
There were concerns surrounding the energy sector and in the form of external shocks. Besides, rise in global oil prices, fire in a domestic offshore oilfield and slowdown in electricity generation have contributed to a moderation in the industrial growth.
The RBI, in an economic assessment in January 2006, had said the real GDP growth could be maintained in 2006-07 at levels close to those in 2004-05 and 2005-06, assuming that the global environment did not turn adverse, that there were no unanticipated shocks, and that appropriate and timely policy initiatives were taken in the agriculture, infrastructure and, above all, fiscal areas.
Even if industrial growth based on the IIP (index of industrial production) bounced back in January 2006, it had hit a low of 5.3 per cent in the preceding month. The year-on-year growth in output of the mining sector is lower at 0.2 per cent compared with 2.6 per cent in 2005.
During the first three quarters of 2005-06, industrial growth was at 8 per cent against 8.5 per cent in the previous financial year. There is a feeling that industrial growth during 2006-07 may be moderate compared with the momentum it has seen since 2003-04.
