India's economic growth will exceed 6 percent in the fiscal year starting March 2013, as the downturn is more or less over, the Economic Survey tabled by the Finance Ministry in Parliament showed Wednesday. The survey suggested that the ministry will bring the fiscal deficit down to the target.
Gross domestic product is forecast to grow in the range of 6.1 percent to 6.7 percent in 2013-14. The growth for the fiscal year ending March 2013 is estimated to decelerate to 5 percent, the lowest in a decade.
Economic slowdown is a wake-up call for increasing the pace of actions and reforms, Raghuram Rajan, Chief Economic Adviser of the Ministry of Finance and the former chief economist to the International Monetary Fund wrote in an introduction to the Survey.
The fiscal deficit would be contained at the targeted 5.3 percent of GDP in this fiscal, the report said. In the longer term, fiscal consolidation will help to bring the fiscal deficit to 3 percent of GDP in 2016-17.
The government will give priority to curb high inflation, it noted. The wholesale price inflation is expected to slow to 6.2-6.6 percent by March this fiscal.
Economic advisers indicated that lower inflation will give the central bank room to cut policy rates, and in turn boost investment. Economic advisers urged the government to take urgent steps to reduce government spending so as to contain inflation.
"Demand compression and augmented agricultural production should lead to lower inflation, giving the RBI the requisite flexibility to reduce policy rates," finance ministry advisers said.
The annual Economic Survey is usually published ahead of the federal budget. Finance Minister Palaniappan Chidambaram, who is set to present 2013-14 budget tomorrow, faces a dilemma of slowing growth and huge budget deficit.
The government is striving to lower the deficit as credit rating agencies threatened last year to downgrade India's rating to junk status.
by RTT Staff Writer
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