New Delhi: 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:
l Economy expected to grow at 8.6 percent in 2010-11 and 9 percent next fiscal.
l Agriculture expected to grow at 5.4 percent in 2010-11 and 3 percent next fiscal.
lIndustry expected to grow at 8.1 percent in 2010-11 and 9.2 percent next fiscal.
l Services expected to grow at 9.6 percent in 2010-11 and 10.3 percent in 2011-12.
l Slow recovery in global economic and financial situation.
l Rising domestic savings and investment chief engines of growth.
l Investment rate expected to be 37.0 percent in 2010-11 and 37.5 percent next fiscal.
l Domestic savings to be over 34 percent in 2010-11 and 34.7 percent next fiscal.
l Current account deficit pegged at 3.0 percent of GDP in 2010-11 and 2.8 next fiscal.
l Trade deficit pegged at $132.0 billion in 2010-11 and $151.5 billion next fiscal.
l Invisibles trade surplus projected at $81.3 billion in 2010-11 and $95.7 billion next fiscal.
l Capital flows can be readily absorbed by needs of high growing economy.
l Capital inflows projected at $64.6 billion for 2010-11 and $76.0 billion next fiscal.
l Accretion to reserves peg-ged at $12.1 billion in 2010-11 and $20.2 billion next fiscal.
l Inflation rate projected at 7 percent by March 2011.
l The declining trend in food prices will result in lower food inflation.
l Manufactured goods inflation has remained low.
l Care has to be taken to ensure manufactured goods inflation remains below 5 percent.
l Monetary policy exit stimulus and look at fiscal tightening.
l Current year fiscal adjustment may not be a problem.
l Fiscal deficit outcome for 2010-11 could be marginally better than budget estimates.
l Consolidated fiscal deficit is likely to be 7.5-8 percent of GDP for 2010-11.
l Considerable urgency in the implementation of goods and services tax.
l Budgeted level of fiscal de-ficit and revenue deficit beyond comfort zone.
l 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.