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 Economic Survey says the economic downturn is 'more or less over'. It has pegged FY14 growth at 6.1-6.7%. It emphasises on the need to curb the twin deficits. Chief Economic Advisor Raghuram Rajan says India's situation difficult but not impossible.
Equity benchmarks rallied Wednesday after the Economic Survey said that the current economic downturn may have run its course, and things were looking up. Midcap shares continued to be under pressure as cash-strapped traders unwound their positions, unable to pay the margins required to hold them.
The Economic Survey 2012-13 projects a gloomy picture of the economy, except for a sliver of hope that the current downturn may have run its course.
Given soaring energy and transportation needs, since there seems to be little we can do to temper oil imports, gold is the component that needs to be contained to bring the CAD back to a comfort zone," the Survey says.
The Survey sees oil subsidies as a key fiscal risk, and that the government needs to raise diesel and LPG prices in line with global rates. On the flipside, higher diesel prices could push up inflation.
On the positive side, the Survey view the medium term fiscal consolidation plan as credible, and the Government will be able to achieve its fiscal deficit target of 5.3 percent for the current year. It sees mixed signals of industrial growth having bottomed out, and that GDP is likely to grow 6.1-6.7 percent next year.
The Economic Survey 2012-13 projects a gloomy picture of the economy, except for a sliver of hope that the current downturn may have run its course. The solutions it has recommended for fixing the problems are only too well-known by now.
The survey notes that there are pressing governance issues like programme leakages and funds not reaching the targeted beneficiaries that need to be addressed.
CNBC-TV18's Siddharth Zarabi says Raghuram's message is clear. Unless India undertakes significant reforms the picture looks bleak.