Highlights of economic review by prime minister’s council

February 21st, 2011 - 5:06 pm ICT by IANS  

New Delhi, Feb 21 (IANS) Highlights of the latest review by the Prime Minister’s Economic Advisory Council headed by former Reserve Bank governor C. Rangarajan, barely a week ahead of the presentation of the federal budget:-Economy expected to grow at 8.6 percent in 2010-11 and 9 percent next fiscal

-Agriculture expected to grow at 5.4 percent in 2010-11 and 3 percent next fiscal

-Industry expected to grow at 8.1 percent in 2010-11 and 9.2 percent next fiscal

-Services expected to grow at 9.6 percent in 2010-11 and 10.3 percent in 2011-12

-Slow recovery in global economic and financial situation

-Rising domestic savings and investment chief engines of growth

-Investment rate expected to be 37.0 percent in 2010-11 and 37.5 percent next fiscal

-Domestic savings to be over 34 percent in 2010-11 and 34.7 percent next fiscal

-Current account deficit pegged at 3.0 percent of GDP in 2010-11 and 2.8 next fiscal

-Trade deficit pegged at $132.0 billion in 2010-11 and $151.5 billion next fiscal

-Invisibles trade surplus projected at $81.3 billion in 2010-11 and $95.7 billion next fiscal

-Capital flows can be readily absorbed by needs of high growing economy

-Capital inflows projected at $64.6 billion for 2010-11 and $76.0 billion next fiscal

-Accretion to reserves pegged at $12.1 billion in 2010-11 and $20.2 billion next fiscal

-Inflation rate projected at 7 percent by March 2011

-The declining trend in food prices will result in lower food inflation

-Manufactured goods inflation has remained low

-Care has to be taken to ensure manufactured goods inflation remains below 5 percent

-Monetary policy exit stimulus and look at fiscal tightening

-Current year fiscal adjustment may not be a problem

-Fiscal deficit outcome for 2010-11 could be marginally better than budget estimates

-Consolidated fiscal deficit is likely to be 7.5-8 percent of GDP for 2010-11

-Considerable urgency in the implementation of goods and services tax

-Budgeted level of fiscal deficit and revenue deficit beyond comfort zone

-To sustain 9 percent growth, steps required are:

a) Contain inflation by policies and supply side management

b) Step up pace of infrastructure creation

c) Continue efforts to contain current account deficit

d) Pay greater attention to agriculture

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