In its monetary and macroeconomic development report, RBI has raised hopes of a rate cut but also flagged some challenges
- Economic growth in 2012-13 might fall below the projected 5.8%
- The inflation rate might moderate to under the projected 7.5% but suppressed inflation risk would persist over 2013-14
- The average Wholesale Price Index (WPI) -based inflation might moderate from 7.5% in 2012-13 to 7% in 2013-14.
- The inflation path over 2013-14 might face downward rigidity
- After a record high of 5.4% of gross domestic product in the second quarter, the current account deficit might further widen in the third
- A likely significant shortfall in tax revenue could prove a challenge in meeting the fiscal deficit target for the financial year
The government’s policy initiatives are yet to fully show up; economic revival, therefore, might take more time
Corporate sales growth has moderated further in the second quarter of 2012-13, to its lowest in three years but corporate net profit growth has shown a marked improvement
