“The impact of the ongoing European recession on India cannot be discounted. Also, despite our efforts, how far industry will be able to revive is yet to be seen,” said a senior government official, adding that 7 per cent growth next fiscal cannot be ruled out.
The finance ministry is understood to be using the estimate for its pre-Budget consultations, and though the final growth projection for next fiscal may be revised based on later data, sources said that it is unlikely to see a huge revision in the next few months to the run up to Budget 2012-13.
Along with the flurry of measures it has already unveiled, the government is also betting on an cut in lending rates by the Reserve Bank of India to help revive the industry, which is crucial for faster economic growth.
In October, the index for industrial production, jumped up to 8.2 per cent, although the cumulative growth in industrial activities between April and October, 2012 is at a mere 1.2 per cent.
Farm sector may also do better with expectations that the rabi crop production will improve. Agriculture grew by a mere 2.1 per cent in the first six months of the fiscal.
The government’s optimism on the improved economic scenario stems from expectations that growth has bottomed out in the first half of this fiscal when the economy expanded at 5.4 per cent.
This was also reflected in its Mid-Year Economic Analysis which said, “There are, however, reasons to believe that the slowdown has bottomed out and the economy is headed towards higher growth in the second half of 2012-13.”
However, a number of research agencies believe that though the economy will pick up in 2013-14, but are not betting on 7 per cent growth as of now. “Growth should accelerate to 6.3 per cent (in 2013) from 4.8 per cent this year (2012) due to favourable base effect, particularly in the industrial sector,” RBS Research said in a recent report.
Similarly, Goldman Sachs recently projected GDP growth at 6.5 per cent in 2013 and by 7.2 per cent in 2014, driven by an easing in financial conditions, continuation of reforms and a normal agricultural crop.
Chief economic adviser to the finance ministry Raghuram Rajan had recently said that painful decisions are needed to get the subsidy under control.
In an interview to a news TV channel, Rajan said, “Hitting that upper band (5.9 per cent) of the (GDP) target is quite ambitious. ... first of all, the investments which have stalled need to come back. We need to get new investments going because investments have slowed down across the economy. You have got to get more confidence among consumers so that they start spending,”
* The optimism on GDP growth stems from expectations that growth has bottomed out in the first half of this fiscal when the economy expanded at 5.4%
* Goldman Sachs has projected India’s GDP growth at 6.5% in 2013 and by 7.2% in 2014
* Along with a flurry of measures it has already unveiled, the government is also betting on a cut in lending rates by the RBI
PM office should ask PSU Chief to invest their cash balance or share their profit with the Govt. By doing this-the investment scenario could be 'changed' & Charged. At the same time, 'why Govt is divesting Hindustan Zinc Ltd and Hindustan Coper and Balco-when its intention is to infuse capital into Air India'?There is no economic sense-to offload the 'strategic stake in these PSU and put the money in the dust bin. This way-Govt is digging its own grave and blame policy measure. There are certain amendment to be brought to 'Bnaking to facilitate Exporters to raise their Financial need' through their bankers, but instaed of bringing amendment-Govt is fooling by declaring 'sops'- and other module to allure the small business units. Entrenched players are 'industrial houses-they have no cash requirements-and theye are least bothered about the 'amendment. This state forcing exporters to stay back from taking risks to get large orders from abroad. Nobody wants to catch the root cause-but the Commerce Ministry is fooling the first generation entrepreneurs and the small players who constitute a major part of the export volume. Is the Govt formulating Policy for the Industrial Houses?Then the future of India's economic growth is a mirage! Govt should frame policies to encourage entrepreneurs to take risk and flourish, some will fail and some will succeed, and thereby they can add their contribution to the economy. But it's not happening since 1973. Certain Banking amendment was suggested by different Panel to support exporters for their raising funds, and thereby boost exports, nobody is visiting that areas, and IIFT(Indian Institute of Finance) knows this, but unfurtunately-our commerce Ministry is declaring "sops". When China is counting 'trade balance almost every month-our Ministry is offering slogans.It's unfortunate to learn that 'FIEO even is not visiting the 'amendment zone in banking for encouraging exporter'?Who else?
which gets down in further estimates at times and even the same will be too low. My India must go for some innovative ideas for noninflationary double digit growth.We must use hetherto untapped infinite solar heat and light, infinite rain water and cheap transport by railways. India gets solar heat and light of infinite anount which is almost free if used without opting costly solar electricity mode . We get rain water 4 times of our needs at consumption point free of cost . Railway is free mode of transport as it consumes 10 times less motor fuel as compared to roads. Electic railway traction is further cheaper and electric road traction is also cheaper than roadways.We must use free solar , free rain water and cheaper transport on war footing.Come on Indians use cheaper , indigenous , unsubsidized and ample resources for high and sustainable growth without inflation.