Prime Minister's Economic Advisory Council Report on Economic Growth Estimates

In the backdrop of a grim economic scenario resulting from uncertain global outlook and high domestic inflation, Prime Minister's Economic Advisory Council (PMEAC) on 1 August 2011 scaled down its projection for the growth rate of the economy in 2011-12 to 8.2 per cent from 8.5 per cent.

The estimates projected in the report are as follows:

•    The report stated that the inflation rate would come down to 6.5 per cent by March 2012.
•    PMEAC estimated the headline WPI inflation rate to continue to be at 9 per cent or higher in the months of July-October 2011.
•    The country's agriculture output was projected to grow at 3 per cent in the current fiscal 2011-12
•    The 2011 monsoon was projected to be in the range of 90 to 96 per cent of the Long Period Average (LPA).
•    In 2011-12, the industrial sector is expected to grow by 7.1 per cent as compared to a higher 7.9 per cent expansion in 2010-11.
•    The services sector was projected to grow at 10 per cent this fiscal, down from 10.3 per cent estimated earlier
•    With regard to fiscal deficit, the Council expects the government to achieve its target for 2011-12 at 4.6 per cent.
•    According to the PMEAC report capital inflows in 2011-12 were likely to go up to $72 billion from $61.9 billion in 2010-11

PMEAC stressed on the urgent need to ensure that the Goods and Services Tax (GST) materialises by 2012-13 as the GST along with the Direct Taxes Code (DTC) would help in the government's efforts to boost revenue and reduce tax arrears. The report called for increase in efforts to collect larger revenue and resolve cases to reduce tax arrears. The council mentioned that there was need to grant the poor a legal entitlement to food through an appropriate legislative enactment.