ARTICLE (June 06 2008): The Macroeconomic Scenario For 2008-09: The previous section has highlighted that the current fiscal year is likely to close with burgeoning deficits in the budget and in the current account of the balance of payments along with galloping inflation.
The real economy is also witnessing a slowdown in the rate of growth, especially in the agricultural and manufacturing sectors, and poverty is on the rise again in face of high and rapidly increasing food prices. Sustainability of the growth process requires, no doubt, the attachment of high priority to containment of the ‘twin’ deficits and to achievement of moderation in the rate of inflation. This has to be accomplished at the minimum cost in the short run to the rate of economic growth.
The objective of this chapter is to project magnitudes of macroeconomic indicators like growth, inflation, public finances and balance of payments which we consider achievable in 2008-09 on the basis of implementation of a relatively strong package of policies. An attempt must be made to ensure that the measures proposed have a minimal impact on the living conditions of the poor. Demonstration of a strong commitment on the part of the government to stabilising the economy will calm markets and help in restoring confidence.
GROWTH PROJECTIONS FOR 2008-09 Table 2.1 below gives the government projections of growth in 2008-09 as presented for approval initially to the Annual Plan Coordination Committee (APCC) and subsequently by the National Economic Council (NEC). SPDC projections are also given in the table. These are based on the economic performance in 2007-08 and the challenges being faced by the economy.