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Feb 27, 2013, 06.50 PM IST | Source: Moneycontrol.com

Economic Survey: Growth in FY13 likely to settle at 5.0%, says CARE

CARE Ratings has come out with its report on economic survey for the year 2012-13 released by Ministry of Finance on February 27, 2013. The Survey notes that India's current economic slowdown is deeply rooted in external causes and domestic weakness.

CARE Ratings has come out with its report on economic survey for the year 2012-13 released by Ministry of Finance on February 27, 2013. The Survey notes that India's current economic slowdown is deeply rooted in external causes and domestic weakness.

The Survey based on developments of FY13, draws out a rather cautious picture of the year gone by, emphasising the continued need for reforms in the coming months with an outlook for the next fiscal pointing towards gradual improvements.

Current Marco-economic Scenario: captured in the deteriorating lead indicators

The Survey notes that India's current economic slowdown is deeply rooted in external causes and domestic weakness. Monetary tightening had been inevitable in the face of increased external headwinds and spiking inflation on account of stimulus support prompting consumption boost matched by inadequate supply-side flows. The macro-economic scenario in FY13 has hence been characterised by -

Moderation in growth

  • Growth in FY13 likely to settle at 5.0% as suggested by CSO
Elevated price levels

  • WPI has registered some moderation, CPI remains high; food inflation resurfacing
  • WPI to settle in the range of 6.2% - 6.6% in March 2013
Fall in savings

Widening current account deficit

Fiscal Breach

  • Lower-than-targeted growth in tax and non-tax revenue couple with increase in government expenditure (particularly fuel subsidy bill)
Government Reaction: what's been done and needs to be?
This environment has warranted the government to reduce spending to anchor inflation, facilitate corporate and infrastructure spending to ease supply and work towards fiscal consolidation. Going forward, these steps would need to be pursued with greater fervour. Provisions commensurate with these macro-targets are likely to reflect in Budget 2014, to be announced tomorrow. With global economy likely to witness recovery in 2013 to some extent, these measures would aid in improving the outlook for Indian economy for 2013-14.

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