Prime Minister's Economic Advisory Panel projected 7.5 - 8 % Growth Rate for 2012-13 Fiscal

The Prime Minister's Economic Advisory Panel (PMEAC) on 22 February 2012 projected 7.5 - 8 per cent growth rate for the fiscal 2012-13. India is also expected to achieve a higher economic expansion if the global environment turns favourable. Indian economy was growing at over nine per cent before the financial meltdown of 2008 pulled down the growth rate to 6.7 per cent in 2008-09.

The economy recorded a growth rate of 8.4 per cent in 2010-11, which according to the CSO estimates is expected to moderate to 6.7 per cent in the current fiscal 2011-12.

As per the Review of Economy (2011-12) released, the growth rate in 2011-12 is likely to be 7.1%, marginally higher than 6.9 per cent projected by the Central Statistical Organisaton (CSO).

Inflation was projected to moderate to 6.5% by March 2012 and 5-6 per cent in 2012-13. While the retail inflation based on Consumer Price Index (CPI) was 7.65 per cent in January, the Wholesale Price Index (WPI) inflation was 6.55 per cent.

Moderation of subsidy is expected to have a positive impact on manufacturing. It is also likely to help in softening of monetary policy. A need to make adjustment on the sale of petrol, diesel, gas and kerosene to reduce the huge burden of subsidy was also felt.

The negative developments in the Eurozone outweighed the small improvements in evidence in the US economy. The PMEAC projected the US economy to grow by more than the 1.8 per cent projected by the International Monetary Fund in September 2011 and reiterated in January 2012.

Sector-wise projection

The council pegged farm sector growth at three percent as compared to 2.5 percent growth projected in the advance estimate. A record output of rice and wheat on the back of good monsoon and strong growth in horticulture and animal husbandry segments are likely to push upward the agricultural sector growth. The farm sector had grown by seven percent in 2010-11.

The manufacturing sector was projected to grow by 3.9 percent while construction segment is expected to expand by 6.2 percent.
As per the PMEAC’s projection, strong growth in the services sector will continue with overall growth estimated at 9.4 percent for the fiscal ending 31 March 2012.

Projected Gross Domestic Product (GDP) growth for 2012 is substantially down from the budgetary target of around nine percent, and 8.4 percent expansion registered in 2011. High interest rates, fragile global economic conditions and the government's inability to push through key reforms hindered growth.

Investment activity slowed down and as a result the gross fixed capital formation for 2011-12 slipped to 29.3 percent, a decline of almost four percentage points over the last four years.