Economy bottomed out : Rangarajan

Says 6.4% GDP growth is possible this fiscal

New Delhi (Agencies) : Hinting that the worst is almost over, the Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan said the growth is expected to pick up faster to 6.4 per cent. He felt the improved performance in agriculture and manufacturing sectors will give required push to economic growth in the current fiscal 2013-14.

Releasing the economic review report for 2012-13, Rangarajan said, "I believe we have reached the bottom, the economy will now continue to grow at a faster rate. We projected a growth rate of 6.4 per cent in the current fiscal."

Economic growth rate had slipped to decade's low of 5 per cent in 2012-13 mainly on account of the impact of the global financial woes. Rangarajan opined that the GDP estimate for 2012-13 would be revised upwards from 5 per cent by the Central Statistical Organisation (CSO).

He assumed that the increased growth rate is possible due to expected better performance of agriculture, industry and services sectors. While agriculture is likely to grow at 3.5 per cent as against 1.8 per cent in the previous fiscal, industry and services sectors are projected at 2.9 per cent and 7.7 per cent respectively. During 2012-13 industry had reported a growth of 3.1 per cent and services 6.6 per cent.

Rangarajan said the action taken by the government to speed up project clearances since September would be visible in the current fiscal. A Prime Minister Manmohan Singh has set up a panel known as the cabinet committee on investment (CCI) to expedite regulatory clearances for major projects. Recently it has cleared several energy and power projects and expected to clear some more in the coming months. However, speedy execution of projects coupled with normal summer rains will usher in a broad-based economic recovery, he said.

For instance, capital investment growth has slowed down due to regulatory hurdles that over Rs7 trillion investment stalled leaving the investors frustrated. Rangarajan has indicated several other actions in order to ensure higher rate of growth. A Among the issues that needs to be addressed include speedy project clearances; reducing CAD; managing the capital account; improving net energy availability; containing inflation and reforms in agricultural marketing and supply chains, PMEAC said.

On the other, the panel said it expects the full-year current account deficit, seen as the main worry for the economy, to narrow to 4.7 per cent in the current financial year from 5.1 percent last year, helped by higher exports and lower gold imports. The CAD has reached historic high of 6.7 per cent of GDP for the quarter ending December 2012. A Observing that controlling CAD remains government's main concern, Rangarajan said, "it is also vitally necessary to encourage exports of both merchandise and services".

Commenting on the falling inflation, PMEAC chairman hoped that demand for gold would diminish thus releasing pressure on CAD. He urged the government to maintain good returns on financial assets to down the demand for gold. While the provisional figure for inflation at the end of 2012-13 is 5.96 per cent. Rangarajan said as non-food manufacturing inflation remains around the comfort zone it will create more space for monetary policy to support growth. He further said, if India grows at 8-9 per cent per annum, "we will graduate to the level of a middle income country by 2025".

PMEAC has projected higher inbound FDI at $36 billion during 2013-14. While the outbound FDI is also expected to increase, resulting in net FDI inflow of USD 24 billion (this fiscal), PMEAC said.

The review said the total central subsidies are expected to go down to `2,31,084 crore in 2013-14 largely owing to pruning down of petroleum subsidies which have been the major cause of fiscal deficit targets being missed in the past. The subsidies stood at `2,57,654 crore or 2.6 per cent of GDP in the last financial year.

A Exports likely to grow 10% in 2013-14

New Delhi (PTI): The PM's economic advisory panel projected about 10 per cent increase in India's exports to $329.7 billion during the current fiscal in view of some improvement in the global growth situation. In the 2012-13 fiscal, the merchandise exports stood at %301 billion. The report said the imports may touch $542.7 billion during the current fiscal, from $501.1 billion in 2012-13.

"Growth of merchandise exports, valued in US dollars, is disappointing, from the period starting in the second half of 2011-12 and continuing through 2012-13," it said.A The trade deficit is expected to increase to $213 billion in 2013-14, from $200 billion in the previous fiscal, the report said.

It said the biggest export casualties in 2012-13 are engineering goods, man-made textiles and ready-made garments. "The two important import-intensive export categories � gems & jewellery and refined petroleum products � also fared poorly," it said.