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Feb 28, 2013, 09.36 AM IST | Source: CNBC-TV18

Union Budget 2013: Survey indicates scope for RBI to ease more, says Pan

According to the Economic Survey, the economic downturn is 'more or less over'. The survey pegs FY14 growth at 6.1-6.7%. The survey emphasises on the need to curb the twin deficits.

Indranil Pan

Economist, Kotak Mahindra Bank

More about the Expert...

According to the Economic Survey, the economic downturn is 'more or less over'. The survey pegs FY14 growth at 6.1-6.7%. The survey emphasises on the need to curb the twin deficits.

As per the survey, the wholesale price inflation is seen between 6.2-6.7 percent by March this year. It says lower inflation would give more elbow room for the RBI to cut interest rates. It sees mixed signals of industrial growth having bottomed out, and that GDP is likely to grow 6.1-6.7 percent next year.

Also read: Economic Survey: Glimmer of turnaround in economy, says Raghuram Rajan

Indranil Pan Chief Economist, Kotak Mahindra Bank in an interview to CNBC-TV18 says the survey is underpinned on the fact that we should be seeing lot more monetary easing from the Reserve Bank of India (RBI). It clearly says that there is adequate scope for the RBI now to act. It also underpins on the fact that we are looking at a fiscal consolidation.

Below is verbatim transcript of his interview on CNBC-TV8

Q: The view on the street is too optimistic and ambitious on the growth side and perhaps too conservative on the inflation projection side. What do you have to say?

A: The way we should be looking at the numbers and these flows across the economic survey, at every point in time, every chapter there are certain factors that have been raised in terms of how you need to de-bottle growth. A lot of these things may not be achieved within the scope of one year. My belief is that the underpinning of the assumptions on growth is that the global recovery happens. It becomes much better in 2013-2014 than in the previous financial year.

It is underpinned on the fact that we should be seeing lot more monetary easing from the Reserve Bank of India (RBI) as it clearly says that there is adequate scope for the RBI now to act. It also underpins on the fact that we are looking at a fiscal consolidation.

Unfortunately what we may be missing out immediately is that there is definitely a challenge in terms of investments picking up because the visibility of demand globally, as well as in India is not too strong enough. Given the fact that we are looking at more in terms of an austerity measure that itself could be sort of headwinds for the overall growth projection.

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