The Prime Ministers Economic Advisory Council (PMEAC) today said the economy will grow at the rate of 7.1 per cent during the current fiscal,a shade higher than the 6.9 per cent estimated by the CSO earlier this month. In fact,in the financial year 2012-13,the economy is likely to do much better and grow at 7.5-8 per cent,C Rangarajan,chairman,PMEAC,said while releasing the review of the economy 2011-12.
We might be able to achieve 8 per cent growth… if the world environment is favourable,we will be able to achieve high growth rate, Rangarajan said.
The economy grew at over 9 per cent before the financial meltdown of 2008,falling to 6.7 per cent as a fallout of the crisis in 2008-09. With regard to inflation,which has remained high most of the year,the EAC said it will moderate to 6.5 per cent for the current fiscal.
The welcome developments in the easing of inflationary pressure will enable the RBI to adjust its monetary stance over the next several months, the council said.
While the retail inflation according to the Consumer Price Index was 7.65 per cent in January,the inflation as per the Wholesale Price Index was 6.55 per cent.
The EAC said the agriculture sector is likely to grow around 3 per cent against the 2.5 per cent estimated by the CSO. This because of good kharif and rabi season along with strong trend growth in horticulture and in animal husbandry sectors. It is likely to grow at 2.5 per cent in 2012-13,as per the EAC. The industry is likely to grow by 4.3 per cent during the current fiscal while services will continue with its strong performance and will grow at 9.4 per cent during the fiscal.
The picture next year looks much brighter. The industry is expected to pick up and grow at 7 per cent and the services are likely to grow at 9.1 per cent.
Rangarajan said as the price stability settles in and appropriate administrative measures are taken,in all likelihood the investment rate will improve despite the difficult conditions in the international financial markets. Inflation is likely to average around 6 per cent for 2012-13,after factoring in diesel decontrol and recovery of rupee during the year.
Stressing the need to provide fillip to the infrastructure sector like power,roads,railways and ports,the council said that the government must set ambitious target for the next fiscal especially in the coal sector.