Centre for Monitoring Indian Economy (CMIE) has said that it maintains its GDP growth forecast for FY 13 at 7.6 %, against the estimated 6.8 % in FY 12.
The union budget for 2012-13 failed to provide any thrust to the slacking pace of economic growth, as no major reforms were announced, nor any concrete measures were introduced to enforce fiscal discipline, CMIE said.
"We do not anticipate any improvement in economic activity on account of the budget proposals. Consequently we have maintained our GDP growth forecast for 2012-13 at 7.6 % against the estimated rise of 6.8 % in 2011-12," CMIE said in its monthly report.
The government did raise excise duty and service tax from 10 % to 12 %. This is expected to lead to inflationary pressure, both at the wholesale and retail level. However, demand is not expected to be affected on account of higher inflation, it added.
"Our revised inflation forecast for FY 13, after taking into account the duty hike, at 6.5 %, still reflects a fall in inflation from the high levels of 9-10 % recorded in the preceding two fiscal years. Easing inflation is expected to provide some leeway for the existing high interest rates to climb down, though this is expected to happen only by the second half of FY 13."
The main driver of economic growth in FY 13 will be the industrial sector. Growth is expected to accelerate to 6.7 % during the year compared to 4.1 per cent in the preceding year. Revival in mining sector output, faster growth in manufacturing sector and robust increase in electricity generation will drive the growth.
Manufacturing sector output is expected to rise at a faster pace of 5.1 % in FY 13, compared to 4.1 % in FY 12. A revival in growth of machinery and equipment, electrical machinery, textiles and ready-made garments sector as well as faster growth in basic metals production is expected to drive the growth in this sector.
Mining sector output is expected to post a recovery from the 2.3 % decline in FY 12 and grow by 5.5 % in FY 13. Higher crude oil production and improvement in natural gas output is expected to be reflected in improved growth prospects for the sector.
Higher imports of LNG , improved availability of coal and uranium, expectation of a normal rainfall coupled with a rise in capacity will reflect in 13.2 % increase in power generation during FY 13.
Services sector is also projected to grow by 9.3 % in FY 13, marginally higher than the nine % growth estimated in FY 12, CMIE said.