Indicating that weakness in economic activity has bottomed out,the Economic Survey 2011-12 projected a sharp rebound in GDP growth to around 7.6 per cent in 2012-13 and 8.6 per cent in 2013-14. It hoped inflation would be 6-7 per cent early in the next financial year.
The Survey,tabled by Finance Minister Pranab Mukherjee in Parliament today,concedes that the slowdown is part rooted in domestic causes,including delayed reforms due to pressures of democratic politics. It pitches strongly for a booster dose of reforms,including specifying a per-litre cap on diesel subsidy,allowing FDI in multibrand retail and flexible labour laws.
It has been a very difficult year for India… During 2012-13,we expect the economy to grow at about 7.6 per cent (+/-0.25 per cent). This is a revival but will be a very slow revival, Kaushik Basu,chief economic adviser to the finance ministry and author of the Survey,said. Growth is expected to be 6.9 per cent in 2011-12. Manufacturing,aided by possible interest rate cuts,would be the key driver for the rebound. Last quarter,manufacturing grew 0.4 per cent. The scope for improvement is very large. We expect a small improvement in agricultural growth also, Basu said.
The Survey noted that rapid fiscal consolidation was the only way out to keep inflation down and growth robust. The principal way… is by raising our tax-GDP ratio and cutting wasteful expenditures, it said.
The Centres gross tax-GDP ratio (BE 2011-12) is 10.5 per cent. Our aim must be to cross 13 per cent by 2016-17, the Survey said. The government must be the enabler,it said.