ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Foreign Trade Eludes Economic Crystal Ball Gazers

Crystal Ball Gazers Kalyan Raipuria While it is welcome that an increasing number of researchers are taking up short-term forecasting through econometric and computable general equilibrium modelling, foreign trade forecasting requires further development in the models to capture policy changes in the area through appropriate indicators. The need for disaggregated analysis in the models cannot also be over-emphasised. With the growing importance of foreign trade as a means to integrate the Indian economy with the global economy, the effort would indeed be worthwhile, UNDOUBTEDLY, the past year, 1997-98 has been a year of slow down, be it in agriculture, manufacturing or exports, all reflected in estimated growth of GDP at 5 per cent or so. The economy needs a 'kick-start' to recover and march again on the growth path of 7 per cent (or more) achieved during 1994-97, It is, therefore, of interest to gauge the possibility of growth and likely direction of the economy in 1998-99, taking different dimensions, and to know if a 'kick-start' is really in store. Among official forecasts, according to the RBI statement (April 29. 1998) on monetary policy, the growth may be 6.5 percent compared to 5.5 percent last year and inflation is estimated at 5-6 per cent compared to 5 per cent last year. The Asian Development Bank has predicted that India's GDP growth may rebound to 6.7 per cent in 1998-99, due to recovery in agriculture and industry, though creaking infrastureture is a constraint, which may finally bring down the growth rate to the RBI level. There are not many equally credible and comparable forecasts available to derive 'consensus forecasts'. However, a comparative look at the lore- casts by select macro-economic modelling teams enables us to get some idea of the likely pace and direction of the Indian economy.

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