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Credit Suisse ups GDP growth to 6.2% from 4.9%

Last Updated: Tuesday, August 4, 2009 - 20:31

Mumbai: Revising upwards its forecast on
India`s GDP growth to 6.2 per cent from the earlier 4.9 per
cent, global financial services major, Credit Suisse today
said the Reserve Bank of India may start increasing interest
rates from the first quarter of calender year 2010.

The Reserve Bank of India may be forced to increase
(rates) to ensure that price pressures do not increase, Credit
Suisse economist, Cem Karacadag, told reporters here.

"The scope for expanding fiscal policy had exhausted
and the RBI was unlikely to hike interest rates till the end
of this year," Karacadag said.
There are limited policy options, he said, adding
"fiscal and monetary policy needs to be tightened, if not now
than later."

India`s economy may grow at a rate of 6.2 per cent in
the current fiscal as against the 4.9 per cent projected by
Credit Suisse earlier, he said.

On inflation, Karacadag said that it may rise on the
back of higher commodity prices and the benchmark whole-sale
price index (WPI) could rise to 6.4 per cent by the end of
the first quarter.

The RBI may also affect an increase in the cash
reserve ratio from the current five per cent to undo
liquidity expansion by March next year, he said.

Bureau Report

First Published: Tuesday, August 4, 2009 - 20:31
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