Shri Suresh Tendulkar, Chairman, Economic Advisory Council to Prime Minister Man Mohan Singh, released 'Economic Outlook for 2008-09' at a Press Conference in New Delhi.

Following are the highlights of the Economic Outlook:

• Economy to grow at 7.7 per cent during 2008/09 as against 9% in 2007-08
• Agriculture 2.0 per cent (4.5% in 2007-08)
• Industry 7.5 per (8.5% in 2007-08)
• Services 9.6 per cent (10.8% in 2007-08)
• A number of factors inimical to growth have intensified in 2008
• Sharp elevation in global commodity inflation, especially food and oil
• Tightening in credit and equity markets following sub-prime crisis in the U.S
• Global slowdown in growth
• Impact of adverse global environment on India
• Lower growth
• Widen the current account
• Pressure the fiscal system through widening subsidy bills.
• Economy continues to be supply constrained, especially in
• Physical and social infrastructure
• Electricity, water, road/rail transportation, urban/rural infrastructure and agriculture
• Robust employment growth between 1999/00 and 2004/05
• 2.89% CAGR by UPSS method and 2.6% by CDS method
• Highest growth rates in industry and services with wide interstate variations
• Outside agriculture sectoral GDP and employment growth rates moved in tandem
• Investment rate similar to 2007/08, but savings projected to decline
• Investment rate projected at 37.5% and savings at 34.5% of GDP
• Lower savings through worsening government finances and erosion in corporate profit.
• Current Account deficit estimated at 3.2% of GDP (1.5% in 2007-08)
• Merchandise trade deficit $ 134.1 billion (10.4% of GDP, as against 7.7% last year)
• Merchandise export growth rate 31.4% (23% in 2007-08)
• Non-oil merchandize exports 22.5% higher
• Merchandise import growth rate 37.8% (27% in 2007-08)
• Crude oil imports 80% & non-oil, non-bullion imports 22.5% higher
• Invisibles trade surplus $ 92.7 billion (7.2% of GDP, as against 6.2% last year)
• Capital inflows of $ 70.9 billion ($ 108.03 billion in 2007-08)
• Net reserves accretion of $ 29.4 billion ($ 92.2 billion in 2007-08)
• Surge in Inflation
• Mostly on account of rising global commodity prices.
• Co-ordinated policy action can bring inflation down to 8-9% by March 2009.
• Tight monetary stance necessary
• Serious fiscal risks
• Fiscal deficit targets to overreach while revenue deficits would persist.
• Fiscal deficit improved through higher tax revenues and lower interest payments.
• Serious fiscal risks arising from growing off-budget liabilities estimated at 5% of GDP.

Growth - Past Performance and Projections for 2008/09

Projected Balance of Payments for 2008/09

Unit: US$ billion
Note: * Business process outsourcing
Figures in parentheses denote proportion to GDP at current and market prices