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India's economy to grow at 6.1 - 6.7%
Cautioning that global developments would continue to impact India's growth story, the Economic Survey on Wednesday pegged the growth rate for 2013-14 at a conservative level of 6.1-6.7 per cent.
". . .the overall economy is expected to grow in the range of 6.1 to 6.7 per cent in 2013-14," the pre-Budget Economic Survey tabled by Finance Minister P Chidambaram in Parliament said.
The economy is projected to grow at 5 per cent in current fiscal, the lowest in a decade. It was 6.2 per cent in 2011-12 and 9.3 per cent a year ago.
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Railway Budget, as it unfolded on February 26
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Eco Survey: India's economy to grow at 6.1 - 6.7%
The projections for the next fiscal takes into account normal monsoon, moderation in inflation rate and mild recovery in global growth.
"While India's recent slowdown is partly rooted in external causes, domestic causes are also important," it said, adding boost to consumption coupled with supply side constraints led to higher inflation.
It said the growth story is unlikely to get support from the global economic developments and would remain tied to movement in international oil prices.
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Railway Budget, as it unfolded on February 26
Complete coverage: Union Budget 2013-14
Budget Impact Live!
Eco Survey: India's economy to grow at 6.1 - 6.7%
Chief Economic Advisor Raghuram G Rajan in his introduction to the Survey said: "These are difficult times, but India has navigated such times before, and with good policies it will come through stronger."
Rajan prescribed shifting national spending from consumption to investment, removing the bottlenecks to investment, growth and job creation, besides making efforts to reduce cost of funds.
Referring to the price situation, the Survey said that elevated food inflation would continue to remain an area of concern with inflation rate gradually inching towards double digit in December 2012.
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Railway Budget, as it unfolded on February 26
Complete coverage: Union Budget 2013-14
Budget Impact Live!
Eco Survey: India's economy to grow at 6.1 - 6.7%
Noting that fiscal deficit target for the current financial year would be 'breached substantially', the Survey underlined the need for curbing government expenditure.
Such an step, it added, would also help in containing inflation, especially in the food items which has pushed retail inflation to near double digit mark.
"With the subsidies bill, particularly that of petroleum products, increasing, the danger that fiscal targets would be breached substantially became very real in the current year. The situation warranted urgent steps to reduce government spending so as to contain inflation", it said.
The government had pegged the fiscal deficit for the current fiscal at 5.1 per cent of the gross domestic product.
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Railway Budget, as it unfolded on February 26
Complete coverage: Union Budget 2013-14
Budget Impact Live!
Eco Survey: India's economy to grow at 6.1 - 6.7%
In view of rising expenditure and subdued revenue collection, Chidambaram raised it to a more realistic level of 5.3 per cent.
The minister had proposed to bring it down to 4.8 per cent for 2013-14.
Some announcements in this regard could be made in the Budget to be unveiled in Lok Sabha on Thursday.
The Survey said that there was across the board slowdown in all sectors during 2012-13 leading to problems in other areas of economy, especially revenue collection.
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Railway Budget, as it unfolded on February 26
Complete coverage: Union Budget 2013-14
Budget Impact Live!
Eco Survey: India's economy to grow at 6.1 - 6.7%
"Another consequence of the slowdown has been lower-than-targeted tax and non-tax revenues".
It, however, expressed the hope that measures announced by the government in the recent months would help in restoring the fiscal health of the government and check widening CAD.
The government has recently partially deregulated diesel prices, allowed FDI in multi-brand retail and liberalised foreign investment norms for various sectors.
"With the global economy also likely to recover somewhat in 2013, these measures should help in improving the Indian economy's outlook for 2013-14", the Survey said.