PM's advisory panel projects 6.7% GDP;pitches for bold reforms

In its Economic Outlook for 2012-13, the Prime Minister's Economic Advisory Council (PMEAC) said deficient monsoon would pull down agriculture sector growth rate to 0.5 per cent putting pressure on inflation, which has been projected at 6.5-7 per cent.

"Economy is expected to grow a shade better at 6.7 per cent in 2012-13," PMEAC Chairman C Rangarajan said pinning hopes on improvement in the manufacturing sector in the second half of the current fiscal.

Earlier in the day, he presented the report to Prime Minister Manmohan Singh.

PMEAC's growth projection for the current fiscal is much better than the forecast made by the Reserve Bank of India (RBI) and other entities. While the RBI lowered its GDP forecast to 6.5 per cent from 7.3 per cent estimated earlier, Moody's and Crisil have pegged it at 5.5 per cent.

The economic growth rate, as per the estimates of the Central Statistical Organisation (CSO) plunged to nine-year low of 6.5 per cent in 2011-12. Rangarajan, however, opined that it might turn out to be more than CSO's estimates.

In order to accelerate growth and deal with the impact of the global problems, Rangarajan suggested boosting investment in infrastructure sector, allow foreign airlines to pick up stake in domestic carriers and contain fiscal and current account deficit.

Making a case for bringing about predictability in taxation regime, Rangarajan said efforts were needed to address investor concerns. He was referring to concerns expressed by investors over retrospective amendment to Income Tax Act and the General Anti-Avoidance Rules (GAAR). MORE