| PM advisory panel cuts India GDP outlook |
NEW DELHI India’s economy will grow 6.7 per cent in the current fiscal year, an advisory panel to the prime minister forecast on Friday, saying that an ongoing slowdown was of “great concern”.
India’s gross domestic product expanded at near double-digit rate for much of the past decade but fell to 6.5 per cent in the year to March, triggering fears that the country’s rapid development was under threat.
In its Economic Outlook for 2012-13, the Prime Minister’s Economic Advisory Council (PMEAC) said deficient monsoon would pull down agriculture sector growth rate to 0.5 per cent putting pressure on inflation, which has been projected at 6.5-7 per cent.
“The growth rate in 2011-12 was low, it came down to 6.5 per cent,” C Rangarajan, chairman of the economic advisory council to Manmohan Singh, told reporters in New Delhi.
“The decline in the growth rate is a matter of great concern to us,” he said. “We expect the growth rate to be a shade better in the current fiscal (year).”
The council also forecast that inflation in the year to March 2013 would be between 6.5 and 7 per cent, above the central bank target of around 5 per cent, because of food price rises after a poor monsoon.
The growth forecast was in line with the prime minister’s own predictions that the rate would narrowly exceed last year’s 6.5 per cent. PMEAC’s growth projection for the current fiscal is much better than the forecast made by the Reserve Bank of India (RBI) and other entities. While the RBI lowered its GDP forecast to 6.5 per cent from 7.3 per cent estimated earlier, Moody’s and Crisil have pegged it at 5.5 per cent. The economic growth rate, as per the estimates of the Central Statistical Organisation (CSO) plunged to nine-year low of 6.5 per cent in 2011-12. Rangarajan, however, opined that it might turn out to be more than CSO’s estimates. In order to accelerate growth and deal with the impact of the global problems, Rangarajan suggested boosting investment in infrastructure sector, allow foreign airlines to pick up stake in domestic carriers and contain fiscal and current account deficit.
Opposition leaders and many independent economists have dismissed such figures as overly optimistic.
Ratings agency Moody’s last week scaled down its growth outlook for Asia’s third-largest economy to 5.5 per cent for the year to March 2013. On Sunday, the prime minister used his Independence Day speech to vow to improve conditions for foreign investment to help revive the economy, which has been hit by a tight monetary policy and global uncertainty.
Agencies
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