Three months down the line, the National Council of Applied Economic Research has revised its forecast for the gross domestic product growth rate this fiscal by 0.3 per cent to 5.83 per cent due to better prospects in industrial outlook, soft interest rates regime and softening of oil prices.

In fact, the forecast is based on the same level of agriculture growth at four per cent and world economic growth at two per cent as was assumed in the earlier assessment of the economy in March. If agriculture output increases to 4.5 per cent due to 'good' monsoon and the world economy moves up to 3.5 per cent, the GDP growth rate would further increase to six per cent, NCAER said in its latest monthly journal, Macrotrack.

"There is a possibility of a higher crop production on a very low base of 2002-03 in light of a good monsoon."

The forecast of higher growth rate was driven by higher investment that results in higher growth in industry as well as lower prices due to the appreciation of the rupee against the dollar; lower interest rates; and lower oil prices.

With improved investment, industry is projected to grow by 5.9 per cent to 6.3 per cent this fiscal.

"This certainly is a possibility with a sustained improvement as supported by data on industrial growth that have been released so far."

Growth in services is also projected to be marginally higher, compared to the March forecast. "The overall upturn in industry and the economy should result in a more buoyant services growth."

Though trade has been faring well even with the appreciation of the rupee, it would be lower than the March assessment in rupee terms. Exports are expected to rise by 10.9 per cent in the event of the world economy rising by 3.5 per cent and 9.4 per cent in case the global economy grows by 2 per cent.

The fiscal deficit is expected to hover around 6 per cent, the same level as was predicted in March.

"It remains nearly at the same level as in the March 2003-04 base. Though GDP at market price is lower in both the current simulations, expenditure is also lower due to lower prices. Hence there is hardly any change in the fiscal deficit," NCAER predicted.

UNI