New Delhi, Sep 13 (IANS) Prime Minister Manmohan Singh's economic advisory panel Friday sharply lowered its forecast for India's economic growth in the current financial year to 5.3 percent from its earlier projection of 6.4 percent.
C. Rangarajan, chairman of the Prime Minister's Economic Advisory Council, said the country's gross domestic product (GDP) is estimated to expand by 5.3 percent in 2013-14.
In its review announced in April, the panel pegged the growth at 6.4 percent.
The economy expanded by 5 percent in the financial year ended March 31, 2013.
Addressing a media conference here, Rangarajan said farm sector growth is estimated to jump to 4.8 percent in the current financial year as compared to 1.9 percent in the previous year.
"The early and good monsoon had a huge positive impact on sowing activity. The reservoir position in the week ending Aug 29, 2013, was 29 percent better than the average of the last 10 years. Thus, both kharif and rabi crops are expected to be good," he said.
Industry, that includes manufacturing, mining and quarrying, electricity, gas, water supply and construction, is projected to grow at 2.7 percent in 2013-14, slightly better than the last year's growth of 2.1 percent.
Manufacturing sector is projected to grow at 1.5 percent in the current financial year as compared to one percent growth registered in 2012-13.
However, the growth of services sector, that account for more than half of the economy, is projected to decline to 6.6 percent in 2013-14 as against 7.1 percent growth registered in 2012-13.
Rangarajan underlined the need for further liberalisation in foreign direct investment (FDI) policy and listed a host of other measures, including fast tracking of public sector investment, and approval of pending bills to revive the economic growth.
He suggested "mid-course corrective measures" to contain fiscal deficit.
The panel also emphasised on the need for "resolution of some tax issues of concern to industry."
He said controlling current account deficit remained the main concern for the policymakers.
The current account deficit is projected to decline to $70 billion, or 3.8 percent of the country's GDP in 2013-14, as against a record $88.2 billion, 4.8 percent of GDP in 2012-13.
Merchandise trade deficit projected at $185 billion, or 10.1 percent of GDP for the current financial year. It was $195.7 billion, or 10.6 percent of the GDP last fiscal.
According to the panel, the centre's budgeted fiscal deficit is estimated at 4.8 percent of the GDP in 2013-14, as against 4.9 percent in 2012-13.
The fiscal deficit during the first four months of the current financial year has already reached 62.8 percent, and expenditure on major subsidies 51.3 percent, of the budgetary provision for the full financial year.
The wholesale price based inflation is estimated to decline to 5.5 percent by the end of the current financial year as against an average of 7.4 percent registered in the previous fiscal.
Rangarajan said good performance of agriculture sector on the back of normal monsoon will help in moderating inflation.
"During 2013-14, the good performance in agriculture will have a moderating effect on food inflation, depreciation of the rupee may put some upward pressure," he said.
"On balance, WPI inflation by end March 2014 will be around 5.5 percent as against the average of 7.4 percent in 2012-13 and 5.7 percent at end March 2013," he added.