When we revise it, GDP could be higher: RBI governor

When the gross domestic product advanced estimate data is revised for a final calculation at the end of the financial year, it could be higher. The Reserve Bank of India governor D Subbarao said that he expected GDP growth estimate would be closer to 7 per cent.

India’s gross domestic product or GDP growth is expected to be lower than 7% at 6.9 per cent, according to advance estimates for the year ending March 2012. 

“When we revise it, it could be higher,” he said while addressing the convocation function at Indira Gandhi Institute of Development research or IGIDR on Tuesday.

He said that India could see capital flows to flow in the first three months of 2012. Since January 2012, foreign institutional investors have injected close to $ 6bn in debt and equity markets.

The governor also said that industrial production could pick up in the first half of 2012.

“The mining industry has been affected. Coal production could pick up. Overall, the investment rate in the economy will improve,” Subbarao said.

He said that the performance of the Indian economy was much better than other economies. However, he said that the government needs to provide a road map for cutting the fiscal deficit. Credit rating agency Moody’s said on Monday that prospects for India’s sovereign rating could improve if the government announces a plan to reduce it.

RBI advised the government on Monday that it was necessary to cut the fiscal deficit to stimulate growth. Fiscal deficit is the amount the government has to borrow from the central bank (RBI) to meet its expenses.

The government's fiscal deficit in 2011-12 is expected to exceed the budget estimate of 4.6 per cent of the GDP on account of subdued receipts and overshooting of the subsidy bill by at least Rs 1 lakh crore over and above the original projection.