Indian economic forecast: post budget analysis April 1994

Abstract

The collective impact of a battery of reforms coming hard on the heels of one another, is still being felt in boardrooms and chaupals. The credibility of the reform dictates that consistent liberalisation policies should be followed. The last budget has introduced the changes in tax structure which are consistent with the liberalisation process. We are forecasting a growth rate of around 6% in 1994-95 and underlying rate of inflation of around 8% as unwinding of many administered prices take place in the first quarter of 1994-95. Current account may post a small surplus in the current fiscal year. Exports would rise by as much as 15% in dollar terms. Improving world trade volume and low crude oil prices are expected to give positive supply shock to the world economy which would benefit Indian exports. Total import value may not rise more than 5% in dollar terms due to a lower value of imports of petroleum products. Dumping of exit policy plans has put industrial restructuring process in the slow land and therefore, generation of large number of permanent jobs in organised sector has got a set back for some time to come.