The Economic Survey for 2012-13 expects the Indian economy to grow between 6.1 and 6.7 per cent in 2013-14, which is higher than the advance estimate of 5.0 percent growth in the current financial year. The survey has given a relatively wide range for growth rate because forecasting growth at potential turning points is difficult.
The survey expects the growth to recover in 2013-14 on the back of a possible better performance from the agriculture, industry and services sectors in during the year compared to 2012-13, the survey said.
The projection of 6.1-6.7 percent growth in 2013-14 assumes a normal monsoon, further moderation in inflation as expected (to induce further relaxation of the tight monetary stance), and mild recovery of global growth as anticipated.
The government is committed to fiscal consolidation. This along with demand compression and augmented agricultural production should lead to lower inflation, giving the RBI the requisite flexibility to reduce policy rates. Lower interest rates could provide an additional fillip to investment activity for the industry and services sectors, especially if some of the regulatory, bureaucratic, and financial impediments to investment are eased, the survey said.