The Prime Minister’s Economic Advisory Council (PMEAC) believes that GDP in 2012-13 is likely to be slightly higher than 6.5 per cent. This new projection will be part of the mid-year economic outlook to be released by the Council on August 16.
“The first two quarters of the current fiscal year may see some decline, but we expect a definite turnaround in the second half (October 2012-March 2013),” C. Rangarajan Chairman of PMEAC, told Business Line here on Thursday.
His remark comes a few days after the Reserve Bank of India revised downwards the growth projection for 2012-13 to 6.5 per cent from 7.3 per cent.
Rangarajan said that mining would see a distinct improvement. But growth in agriculture was expected to be around one per cent. Cement and steel, he said, were showing good growth and this would benefit the manufacturing sector.
“We will first see improvement in industrial production and further in the overall growth,” he said.
The eight core industries’ data, released on Wednesday, showed a growth rate of 3.6 per cent, which is lower than 5.2 per cent recorded in June last year. However, the significant point is that coal production has turned positive, while cement production’s growth rate is now in double digits.
Rangarajan also believes that the current account deficit will be lower than the 4.2 per cent of 2011-12 because of a decline in gold imports and a reduction in the price of crude oil.
“At the same time, we do not see much buoyancy in exports, which will bring down the trade deficit,” he said.
The PMEAC chief also expects a pick-up in capital inflows. Foreign direct investment, portfolio investment, non-resident deposits and external commercial borrowings, will begin to do well, he said. NRI inflows, in particular, are expected to increase sharply.
Agreeing with RBI on the inflation front, Rangarajan said headline inflation could be around seven per cent by March 2013.