The Economic Advisory Council to the Prime Minister (of India) on 13 September 2013 released the document Economic Outlook 2013-14 in New Delhi. The economic growth forecast of India for the current fiscal 2013-14 was lowered to 5.3 percent from 6.4 percent projected earlier. The PMEAC had in April 2013 projected 6.4 percent growth for Indian economy for current financial year. RBI too had earlier lowered its growth projection for this fiscal to 5.5 percent from 5.7 percent. The Economic Outlook condition listed out host of measures including further liberalisation of FDI norms to improve economy.
The other major highlights of Economic Outlook India are as following:
• The PMEAC expects the agriculture sector to grow by 4.8 percent in the current fiscal up from 1.9 percent, while the industrial growth has been pegged at 2.7 percent as against 2.1 percent in 2012-13.
• The growth of services sector, however, is projected to decelerate to 6.6 percent in current fiscal from 7.1 percent a year ago.
• In order to promote growth, the advisory council suggested that the government should liberalise FDI investment norms, resolve tax concerns of the industry, fast track public sector investment and initiate measures to contain fiscal deficit.
• Referring to the external sector, the advisory council expressed hope that the Current Account Deficit (CAD) in 2013-14 will come down to 70 billion US dollars or 3.8 percent of GDP, from 88.2 billion US dollars or 4.8 percent a year ago.
• As regards rupee, it was hoped at the current level it is well corrected. Stability is returning to the foreign exchange market. As capital flows return and as CAD begins to fall, this tendency will strengthen.
• Admitting that rupee depreciation will put some pressure on inflation, the advisory council stated that On balance, WPI inflation by end March 2014 will be around 5.5 percent as against the average of 7.4percent in 2012-13 and 5.7 percent for March end 2013. The wholesale and retail inflation widened in recent months primarily on account of higher weightage of food items in CPI. The retail inflation in August 2013 stood at 9.52 percent, while the WPI numbers in July was at 5.79 percent.
• The trade deficit, PMEAC said, would come down to around 185 billion US dollars in 2013-14, against an estimated 195.7 billion US dollars in 2012-13.
• Between 2010-11 and 2012-13, the combined impact of higher net oil and net gold imports on the CAD (Current Account Deficit) was almost 57 billion US dollars or 3 percent of GDP.
• The CAD may go even below 70 billion US dollars in 2013-14 if the recent trends in exports and imports are maintained through the year.
• Net Capital flows are projected to fall to 61.4 billion US dollars in 2013-14 against an estimated 89.4 billion US dollars in 2012-13 putting pressure on the country's forex reserves.
Where: New Delhi
When: 13 September 2013