Indian economy is likely to grow between 6.1% to 6.7% in 2013-14 as the downturn is more or less over and the economy is looking up. The Economic Survey 2012-13, tabled by Finance Minister P. Chidambaram in the Lok Sabha today observed that following the slowdown induced by the global financial crisis in 2008-09, the Indian economy responded strongly to fiscal and monetary stimulus and achieved a growth rate of 8.6 per cent and 9.3 per cent in 2009-10 and 2010-11. However due to a combination of both external and domestic factors, economic growth decelerated to 6.2% in 2011-12, and an estimated 5% in 2012-13. The Survey predicts that the global economy is also likely to recover in 2013 and various government measures will help in improving the Indian economy’s outlook for 2013-14.
The Economic Survey said, the recent reforms in diesel prices and efforts at expenditure reprioritisation indicate that the medium- term fiscal consolidation plan is credible and could yield macro- economic dividends in terms of higher growth and price stability. The Survey has pitched for curbing import of gold to contain the current account deficit, widening the tax base and prioritising expenditure to check the fiscal deficit. It also said, that Headline WPI inflation may decline to between 6.2 percent and 6.6 per cent in March 2013. The Economic survey also noted that the country's social sector spending has seen a continous increase in the recent years and said there was a need to balance the dual imperatives of growth and inclusion.
The Survey said, slowdown in the rate of growth of services sector in 2011-12 at 8.2%, and particularly in 2012-13 to 6.6 percent from the double-digit growth of the previous six years, contributed significantly to slowdown in the overall growth of the economy. Some slowdown could also be attributed to the lower growth in agriculture and industrial sectors.
For improved agricultural growth, the survey underlined the need for stable and consistent policies where markets play an appropriate role, private investment in infrastructure is stepped up, food price, food stock management and food distribution improves, and a predictable trade policy is adopted for agriculture. The Survey said, FDI in retail allowed by the government can pave the way for investment in new technology and marketing of agricultural produce in India. It said, fast agricultural growth remains vital for jobs, incomes and food security.
The survey calls for a widening of the tax base, and prioritization of expenditure as key ingredients of a credible medium term fiscal consolidation plan. It said, lower interest rates could provide an additional fillip to investment activity for the industry and services sectors, especially if some of the regulatory, bureaucratic, and financial impediments to investment are eased.
Dr. Raghuram G. Rajan, Chief Economic Adviser, Ministry of Finance noted in the Survey that these are difficult times, but India has navigated such times before, and with good policies it will come through stronger. The Survey said, slowdown is a wake-up call for increasing the pace of actions and reforms. The way out lies in shifting national spending from consumption to investment, removing bottlenecks to investment, growth, and job creation.
