Good,Bad and Ugly

The forecasts for the year 2009 given by three prominent economists of the country can be categorized as :

1.Good - Arvind Virmani, chief economic advisor of the government;
2.Bad- Raghuram Rajan, economic advisor to the prime minister;
3.Ugly- Rajiv Kumar, head of the Indian Council for Research on International Economic Relations (ICRIER).

According to Mr. Viramani the forecast is a strong 8.5% growth in the fiscal year 2009-10, this is based on the analysis done by him which says that Indian with a strong saving of 36% will allow it to substantially ward off the crisis. Normally the growth rate would be a quarter of the saving so it should be 9% theoretically but because of the global influences it is expected to be around 8% which is a very good number at the present situation we are in.He also says that as india is not a export oriented country the deficit will be less as we import many raw materials to produce the products to be exported so the exports and imports both will decline at same level.

According to Mr. Raghuram Rajan, the GDP growth for the year 2009-10 will be about 5-7%, this is a huge range and the probability of this coming true is also high. The higher level will be attained if the global economic situation improves and the lower range is when the situation worsens further. This is bad but not ugly.

According to Mr.Rajiv Kumar, the results of the ICRIER model that he developed which has given accurate predictions of the 2007 GDP growth of 9% and the first model to indicate the slow down has predicted a staggeringly low GDP growth of just 3.9 % for the fiscal year 2009-10. Ugly right. This models takes into account 10 leading indicators including GDP growth in the US and Europe, factoring in the global slowdown.

If a probabilty has to given to the above predictions :

1. good - 10%
2. bad - 60%
2. ugly - 30%

This a biased prediction as would want the economy to be good or bad not ugly at any circumstances.