Apprehending the worst slowdown in six years--since 2003--the Reserve Bank of India (RBI), India's central bank, on Tuesday drastically cut its GDP growth forecast for fiscal 2008-09 ending March 31 from 7.5-8 per cent to 6.8 per cent irrespective of joint efforts with the government.
The efficacy and impact of two stimulus packages declared by the government and easing of the constricted monetary policy by central bank governor Dr D Subbarao would take time to be assessed, says the quarterly review of economic and credit policy of the central bank.
The RBI has warned that these measures are expected to widen the budgetary deficit from the estimated 2.5 per cent--as estimated in the Budget--of the GDP to around 5.9 per cent because of moderate economic activity and subsequent slowing down of tax revenues.
The bank has foreseen inflation to drop to around three per cent by March.