PMEAC projects 5.3% economic growth for 2013-14
Says current stance of monetary policy has to continue until stability in the rupee is achieved
Prime Minister's Economic Advisory Council (PMEAC) Outlook for 2013-14Economic Growth
* Economy to grow at 5.3% in 2013-14 (lower than 6.4% projected in Feb 2013)
* Agriculture to grow 4.8% with early and good monsoon
* Industry to grow at 2.7% as against 2.1% in 2012-13.
* Services to grow at 6.6% in 2013-14 as against 7.1% in 2012-13.
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* The full impact of various measures taken over the last six months will be reflected later in this year
* Investment rate projected at 34.7% of GDP in 2013-14 as against the estimated 35% in 2012-13.
* Domestic savings rate projected at 31% of GDP as against the estimated 30.2 % of GDP 2012-13.
Domestic Inflation
* Depreciation of the rupee may put some upward pressure.
* On balance, WPI inflation by end March 2014 will be around 5.5% as against the average of 7.4% in 2012-13 and 5.7% at end March 2013.
External Sector:
* Controlling CAD remains main concern at present.
* Current Account Deficit projected at $70 billion (3.8% of GDP) in 2013-14 against an estimated $88.2 billion (4.8% of GDP) in 2012-13.
* Merchandise trade deficit at 10.1% of GDP) in 2013-14 against 10.6% in 2012-13
* Net invisibles earnings projected at 6.3 % of GDP in 2013-14 against 5.8% in 2012-13
* The CAD may go even below $ 70 billion in 2013-14 if the recent trends in exports and imports are maintained through the year.
External Value of the Currency
* Emerging Market currencies have sharply depreciated in 2013
* For India, the short-term problem is of financing the large CAD
* Medium term issue is to compress CAD to 2.5% of GDP and ensure price stability.
Fiscal Situation
* Containing fiscal deficit within the budgeted estimate could be a challenge
* Discretionary expenditure budgeted may need to be compressed, and subsidies restructured
Monetary Policy
* The current stance of monetary policy has to continue until stability in the rupee is achieved.
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