RBI stays bullish

The RBI's growth forecast in its just unveiled annual monetary policy, I am pleased to say, is identical to mine:

In view of these factors, overall, for policy purposes, real GDP growth in 2008-09 may be placed in the range of 8.0 to 8.5 per cent, assuming that (a) global financial and commodity markets and real economy will be broadly aligned with the central scenario as currently assessed and (b) domestically, normal monsoon conditions prevail.

The central bank, being a central bank, has hedged its forecast with the mandatory qualifications but these are not terribly consequential. I don't see any reason to think that the global outlook will change materially; and the news on the agricultural front has been good.

Remember, every single forecast on the Indian economy in the past five years has been an under-estimate. So, I wouldn't be surprised if growth hits 9%. That would be the decisive deathblow to those who claim that the spurt in economic growth was a fluke created by the global boom. If you can grow at 8-9% in these conditions.........