New Delhi, April 23
Laying emphasis on faster clearances of projects to fast-track investments, the Prime Minister’s Economic Advisory Council (PMEAC) headed by C Rangarajan has projected a much higher growth rate of 6.4 per cent for the current financial year (2013-14) as against the estimated 5 per cent last year, the lowest in a decade.

Releasing the economic review for 2012-13 here today, Rangarajan said the economy has bottomed out and the current year will see higher growth on the back of improvement in agriculture and manufacturing.

It may be pointed out that the Prime Minister’s Economic Advisory Council projections in the recent past have been optimistic while the actual numbers of growth have come in much lower.

Rangarajan said that the GDP estimate for 2012-13 would be revised upwards from 5 per cent estimated in February by the Central Statistical Organisation (CSO). The agriculture sector is projected to grow almost double at 3.5 per cent on the back of a normal monsoon this year compared to 1.8 per cent in the previous fiscal.

In case of industry and services sectors, the growth rates have been projected at 4.9 per cent (3.1 per cent in 2012-13) and 7.7 per cent (6.6 per cent), respectively. On the troublesome current account deficit (CAD), Rangarajan said it is likely to come down to 4.7 per cent of the GDP in 2013-14 from about 5.1 per cent in the previous fiscal on the back of higher export growth and lower imports of items like gold. The recent correction in prices of crude oil and gold has brought some comfort to the policy managers.

On the price situation, the PMEAC said inflation continues to remain high, but there are definite signs that wholesale price index (WPI) based inflation is coming down.

It has pegged the inflation at around 6 per cent in 2013-14. While it has projected a much higher FDI inflow this year, the estimates on foreign portfolio investment are lower than last year. In its prescriptions to the government, the foremost is speedy clearances of projects especially in the infrastructure sector. Rangarajan said policy and administrative actions such as the recently constituted Cabinet Committee on Investment can help overcome obstacles in the speedy execution of projects. The government, he said, would have to maintain an attractive return in financial assets for bringing down the demand of gold.

In addition, price and subsidy reforms in petroleum products need to be completed to control our oil import bill. Facilitating an increase in domestic coal production will make a substantial difference.