NEW DELHI: The economy is expected to grow in the range of 7.5% to 8% in the fiscal year ending March 2013, the Prime Minister’s Economic Advisory Council said on Wednesday, but cautioned that the government must unveil steps to repair public finances and rein in subsidies to bring the economy to a high growth path.
The council also said the economy will expand 7.1% in the current fiscal year which ends in March, marginally higher than the 6.9% estimated by CSO.
“We might be able to achieve 8% growth on our esteem… if the world environment is favourable, we will be able to achieve high growth rate,” chairman of the Prime Minister’s Economic Advisory Council (PMEAC) C Rangarajan told a news conference. The council also said that for overall macroeconomic stability, attention must be paid to prices, exchange rate and fiscal balances. TOI had reported on Tuesday that the PMEAC would project a growth rate of 7.5% for 2012-13.
It said inflationary pressure will continue to ease in 2012-13 and will remain around 5-6% for the year. Inflation has remained stubborn for nearly two years forcing the Reserve Bank of India to raise interest rates 13 times since March 2010. This has hurt growth and impacted the industrial sector. The RBI is expected to ease its tight monetary policy.
“It will be necessary to keep a sharp vigil on food prices to take proactive measures not only to encourage output increase but equally, if not even more urgently, to ensure the rollout of an adequate food logistics network that can do justice to the rising demand for and output of horticulture and animal products,” the PMEAC said in its report. The council said the fiscal situation in the country was a cause for serious concern. It said since 2007-08, there was a steady deterioration in the situation and the present status was not different from the precarious position that existed in 2001-02.
“It is also important to note that the problem is not structural and needs to be remedied without much loss of time,” the report said.
Source: Times of India