New Delhi, April 23 (IANS) The Indian economy has "bottomed out" and is expected to grow at 6.4 percent in the current fiscal against the estimated 5 percent expansion registered in the previous year, the prime minister's economic advisory panel said Tuesday.
"The economy has bottomed out and we will achieve higher growth of 6.4 percent in the current financial year," Prime Minister's Economic Advisory Council chairman C. Rangarajan said at a media conference here.
He said agriculture sector growth is likely to increase to 3.5 percent 2013-14 as compared to the estimated 1.8 percent growth in the fiscal ended March 31, 2013.
The growth of manufacturing sector is likely to increase to 4 percent in the current financial year as compared to 3.1 percent in the previous year.
The services sector is estimated to expand by 7.7 percent in 2013-14 as compared to 6.6 percent growth projected for the previous fiscal.
Rangarajan said growth would accelerate further if the government expedite clearance for major projects.
"If we take action for speedy implementation of projects we can achieve the higher rate of growth quickly even in the short-term," he said.
Rangarajan released a report on the state of the economy and projections on major macro-economic indicators.
According to the panel's estimate, the country's main inflation is expected to be at around 6 percent in the current financial year as compared to the estimated 5.96 percent at the end of the financial year 2012-13.
Rangarajan said moderation in inflation would give scope for monetary policy easing by the central bank.
He said primary food inflation is expected to remain at around 8 percent, fuel inflation at around 11 percent and manufactured goods inflation at around 4 percent in the financial year 2013-14.
"Inflation at around 6 percent gives scope for rate cut," Rangarajan said.
The central bank has been maintaining tight monetary policy for the last three years to contain inflation.
The Reserve Bank of India (RBI) is scheduled to announce it monetary policy May 3.
However, Rangarajan admitted that even at 6 percent inflation was high and it needed to be brought down further.
On fiscal deficit, Rangarajan said it was likely to remain at the same level as estimated in the union budget in February by Finance Minister P. Chidambaram.
"The road map for fiscal consolidation has been well laid out. Government has shown its determination to contain the fiscal deficit. The current account deficit, however, remains a source of concern, despite the fact that the financing of the deficit has not been a problem so far," the PM panel said.
"While in the short run, we should take such actions that are necessary to encourage capital flows, over the medium term, we need to bring down the current account deficit to moderate levels," it said.
The fiscal deficit of the centre for 2012-13 is estimated to be 5.2 percent of the gross domestic product (GDP). It was Rs 520,924 crore in 2012-13 as per revised estimates, and is expected to be Rs 542,499 crores in 2013-14 as per budget estimates.
Total central subsidies stood at Rs.257,654 crore (2.6 percent of GDP) in 2012-13. It is expected to decline to Rs.231,084 crore in 2013-14 largely due to the pruning down of petroleum subsidies which have been the major cause of high fiscal deficit in the recent years.
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