Macroeconomic Forecast India

February 2006 | Macroeconomic Forecasts

The Indian economy will accelerate in fiscal year (FY) 2005 (ending March 2006), from 7.5% in FY04, due to strong industry and service output. The normal monsoon in 2005 has also boosted farm output, and we expect growth of 7.9% in FY05 following 8.1% expansion during the first half of the fiscal year. Despite the strong growth rates, India needs to grow at double-digit rates to cut mass poverty. Meanwhile, high oil prices remain a significant downside risk to strong growth, since India imports 70% of the crude oil it consumes.

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