Growth will slip to 5.5% this fiscal, says RBI survey

Our Bureau Updated - March 12, 2018 at 06:24 PM.

Gradual recovery to start in 2014

BL29_P7_RBI_GROWTH

Growth will moderate to 5.5 per cent in the current fiscal before it starts to recover gradually in financial year 2014, a Survey of Professional Forecasters conducted by the Reserve Bank of India says.

While announcing the second-quarter monetary policy review in October, the central bank had pegged the gross domestic product (GDP) to grow at 5.8 per cent.

The full-year growth in factory output may fall below last year’s growth of 2.9 per cent, the central bank pointed out. In April- November 2012, factory output grew a mere one per cent.

According to the 22nd round of the survey, GDP growth will gradually recover and wholesale price index-based inflation will gradually moderate in 2013-14.

The survey establishes that the twin deficit situation of the country will likely improve in the next fiscal.

The current account deficit (CAD) is likely to soften to 3.5 per cent and fiscal deficit is projected to fall to 5.3 per cent.

INFLATION EXPECTATIONS

Reserve Bank’s latest inflation expectations survey (30th round) indicates that the perception of current inflation as well as the expectations on future inflation, among common people, has increased marginally in the third quarter.

RBI also cautioned that a widening CAD poses a major challenge to inflation control. CAD increased to 5.4 per cent of GDP in second quarter of FY 2013. “Given India’s low trade elasticities, there is little alternative but to use expenditure-reducing policies in addition to expenditure-switching policies to bring CAD down to a more sustainable level of around 2.5 per cent of GDP,” RBI said.

There is also a need to reduce dependence on debt-creating capital inflows, RBI added.

“This is particularly important as the export prospects remain impacted by global slowdown.”

satyanarayan.iyer@thehindu.co.in

Published on January 28, 2013 16:23