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Prime Minister's Economic Advisory Council (PMEAC) has pegged India's Gross Domestic Product (GDP) growth at 5.3% for the current financial year.
This is way down from their earlier estimates of 6.4% but higher than sub-5% growth projected by various brokerage firms and independent economists.
C Rangarajan, Chairman of PMEAC said in a press conference that containing the fiscal deficit within the budgeted target of 4.8% of GDP could be a challenge.
In order to achieve the 4.8% fiscal deficit target, action will have to be taken during the year particularly in the case of subsidies.
Talking about the food security Bill's burden on the fiscal deficit, Rangarajan said, "As far as current year goes, the burden will not be heavy because implementation will take time."
He added that there should be a cap on the total subsidies.
"If food subsidy is paramount then other subsidies should be brought down consequently", Rangarajan said.
Rangarajan projected FY14 CAD at $70 bn or 3.8% of GDP. The Council attributed the rise in CAD to gold and oil.
"Agriculture will grow at 4.8% as a result of well distributed monsoon," he said. Agriculture grew at 1.9% in 2012-13. He added that industries is projected to grow at 2.7% in 2013-14.
Manufacturing has been pegged at 1.5% for the current financial year while services are projected to grow at 6.6%, PMEAC said.
The PMEAC forecast the wholesale inflation at 5.5% for the current financial year. "Good performance of agriculture will have moderate impact on inflation, however, depreciated rupee can add pressure to this", the Council said.
Reserve Bank of India (RBI) must maintain its current monetary stance until the rupee stabilises, Rangarajan said.
PMEAC pegged net foreign direct investment (FDI) flows at $21.7 billion for the current fiscal year, down from an earlier estimate of $24 billion.
The trade deficit would remain at $ 105 billion for 2013-14, it said.
India's economy grew at 4.4% in the three months to June -- the slowest quarterly rate since the global financial crisis -- hurt by a contraction in mining and manufacturing.
