PMEAC pegs GDP growth at 7.2% in FY10

The Prime Minister's Economic Advisory Council (PMEAC) expects the economy to grow by over 7.2 per cent during the current fiscal and exceed 8 per cent in 2010-11, thanks to increased economic activity.

"We are making an initial estimate that the economy would grow by 8.2 per cent in 2010-11 and by 9 per cent in 2011-12," PMEAC chairman C Rangarajan said, releasing the economic outlook.

As regards the current fiscal, he said the growth rate could be more than the 7.2 per cent projected by the Central Statistical Organisation (CSO). Today's projection is also higher than the 6.5 per cent the PMEAC had forecast in October.

He further suggested that the government should initiate fiscal consolidation measures in the forthcoming Budget as the current level of fiscal and revenue deficits are unsustainable.

His suggestion comes ahead of next week's Union Budget to be presented by Finance Minister Pranab Mukherjee in the Lok Sabha.

Highlights of PMEAC report:

Following are the highlights of the Economic Review for 2009-10 prepared by the Prime Minister's Economic Advisory Council:

*  Economy to expand by over 7.2% in 2009-10
*  GDP to grow 8.2% in 2010-11, 9% in 2011-12
*  Farm sector output much better than expected earlier
*  Industrial growth to rebound in Q3 and Q4 of FY'10
*  Food inflation may spill to other sectors in 2010-11
*  Large fiscal deficit unsustainable
*  Fiscal deficit needs to come down by 1-1.5% in 2010-11
*  Reduce expenditure-GDP ratio by 1 per cent
*  Expand service tax coverage; unify rate with CENVAT
*  Scale up nuclear power generation
*  Exports projected at $168.7 billion in 2009-10
*  Imports seen at $296.8 billion in current fiscal