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The Economic Survey, 2012-13, presented today gave a wide range of 0.6 percentage points for its projections for economic growth next fiscal as it recognised that forecasting at potential turning points is difficult.
Authored by Chief Economic Adviser and his team in North Block, the survey assumes a normal monsoon, further moderation in inflation and mild recovery in the global economy. However, it noted that global support to Indian economy will not be significant.
The survey said that the government's priority to fight high inflation by reducing fiscal impetus to demand and focusing on incentivising food production through measures other than price supports. This has highlighted the government resolve to rein in the Centre's fiscal deficit at 5.3% of GDP against the Budget target of 5.1% and reduce it further to 4.8% next financial year and ultimately to three% by 2016-17.
It called for a widening of the tax base and prioritisation of expenditure as key ingredients of a credible medium term fiscal consolidation plans.
In this light, it pointed to an increase in expenditure on social services and leakages associated. The Direct Cash Transfer, it hoped will help plug the leakages.
The headline inflation declined to a three-year low of 6.62% in January. Inflation was seen decelerating to 7.55% in the first nine months of 2012-13. It had averaged 9.56% in 2010-11 and 8.94% in 2011-12.
The survey said, that the Balance of Payments is under pressure. In the current fiscal, foreign exchange reserves have fluctuated between $286 billion and $295.6 billion, while the rupee remained volatile in the range of Rs 53.02 to Rs 54.78% dollar during October 2012 to January 2013.
The survey had a special chapter on jobs. It said future holds promise for India provided we can seize the demographic dividend as nearly half the additions to the Indian labour force over the period 2011-30 is in the age group of 30-49 years.
Pointing out that non-performing assets of the banking sector rose from 2.36% of total advances in March, 2011 to 3.57% in September, 2012, it pinned hopes on revival of growth to tackle this issue.
In the introduction to the Survey, Rajan exuded confidence over the Indian economy bouncing back. He wrote,"these are difficult times, but India has navigated such times before, and with good policies it will come through stronger."
