PM’s panel sees 7.5% GDP growth?

New Delhi: The Prime Minister's Economic Advisory Council (PMEAC) is expected to project a GDP growth rate of 7.5% for 2012-13 due to various challenges confronting the economy. For the current fiscal, it is expected to keep it at 7%, a shade above the Central Statistics Office's (CSO) estimate of 6.9%. But, government officials say PMEAC is likely to flag the concerns explicitly when it unveils its economic outlook on Wednesday. 

    CSO's 6.9% projection is the slowest pace of growth since the 2008 global financial crisis, far below the 9% growth rate forecasted in Budget 2011-12. 
    The economy has slowed due to a combination of factors, which include high interest rates, stubborn inflation, sharp increase in input prices and the global economic slowdown. 
    The PMEAC's estimate shows that key policymakers would prefer to keep the projection modest and not be too bullish despite signs of some improvement in the economy. The stock market has revived, while the rupee has stabilized after being the worst performing currency last year. After last year's experience, North Block too is expected to be conservative, while assuming the growth rate for its 2010-13 Budget numbers. 
    The slowdown in the economy and the industrial sector has put most of the 2011-12 Budget numbers in doubt. The government is unlikely to talk 8%-9% growth, considering the challenges in the conomy. 
    Global crude and commodity prices are a concern, while the sovereign debt problems in the Eurozone and the US are yet to be fully fixed. 
    The PM's council is likely to project that inflation, as measured by the wholesale price index, is expected to ease to around 7% by Marchend, similar to RBI's assessment. Inflation has remained a key policy challenge for the government for the past two years, prompting RBI to raise interest rates 13 times since March 2010 to calm stubborn price pressures. While food inflation has eased significantly, bringing relief, manufactured product inflation still remains a worry. 
    The PMEAC is also expected to discuss the issue of fiscal consolidation and the need to repair public finances to boost confidence. The government has said it would be difficult to meet the fiscal deficit target of 4.6% of GDP for the current fiscal year. Officials and economists say the fiscal deficit for the current fiscal is expected to be around 5.2%-5.5% of GDP. Rising spending commitments, sluggish tax revenues and expanding food and fuel subsidies have hurt the government's plan to rein in the deficit. The RBI has also urged the government to unveil a credible fiscal consolidation roadmap to help it ease interest rates. 
GDP to grow by 7.7% in 2012-13: CMIE 
Chennai:India's gross domestic product (GDP) is set to grow by 7.7% in 2012-13 on the back of lower headline inflation and strong capital inflows into the country, economic think tank Centre for Monitoring Indian Economy (CMIE) said in its latest bulletin on Economic Intelligence Service. GDP is a macroeconomic measure of the value of output economy adjusted for price changes (that is, inflation or deflation). Real GDP is expected to grow by 7.7% in 2012-13. This will be an improvement over the 7% growth projected for 2011-12. "Though the global outlook remains uncertain, domestic factors are likely to be more favourable in 2012-13 than they were in 2011-12," CMIE said in its report. TNN