India's real economic growth is expected to pick up in the next financial year, while inflation is seen easing due to tight monetary policy and measures taken by the government to curb price growth, according to the Economic Survey 2011-12 tabled by Finance Minister Pranab Mukherjee in parliament on Thursday.
The outlook for growth and price stability at this juncture looks more promising, the survey said.
Economic growth is forecast to pick up to 7.6 percent in 2012-13 and faster beyond that. For 2011-12, growth is estimated to be lower at 6.9 percent, but India remains one of the fastest growing economies of the world, the survey showed. The agriculture sector growth is forecast to achieve 2.5 percent in 2011-12.
Although the global economy is set to remain quite fragile, preliminary calculations suggest that the India's growth rate in 2013-14 will be 8.6 percent, the survey revealed.
Industrial growth pegged at 4-5 percent for FY 2013. Industrial activity is estimated to strengthen as economic recovery resumes.
Inflation is forecast to moderate to 6.5 to 7 percent by March 2012. The ministry expects further slowdown during 2012-13 due to tightening of monetary policy and other measures put in place by the government.
The survey emphasized that rapid fiscal consolidation is the only way out to keep inflation down and aim for robust growth. The ministry estimates fiscal deficit to fall to 4.1 percent of GDP in 2012-13 and then to 3.5 percent in 2013-14.
There may be some slippage in fiscal target during the current year, but in the medium-term stance of fiscal consolidation could be salvaged. Still the timelines may have to be redrawn, the ministry said in the report.
During recent months, export growth slowed, while imports remained at elevated level, resulting in higher trade deficit. The survey advised to diversify India's export basket as its presence is limited in the top items of world trade.
Due to a rise in trade deficit, the current account gap widened to $32.8 billion or 3.6 percent of GDP in the first half of 2011-12. The rupee's high volatility impairs investor confidence, necessitating a more aggressive stand to check its volatility.
According to the Economic Survey, a trade deficit of more than 8 percent of gross domestic product and current account deficit of more than 3 percent is a sign of growing imbalance in the country's balance of payment.
by RTT Staff Writer
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