Here’s another warning that the Indian economy is headed for a sharp slowdown — inflation is expected to stay high and the job scene bleak.
The PM’s economic advisory council (PMEAC), headed by C Rangarajan, on Friday lowered its growth projection for 2012-13 to 6.7% from 7.5-8%. Economic growth crashed to 6.5% in 2011-12 and by 5.3% in January-March — a nine-year low. Costly borrowing and inputs have dampened investment activity as firms defer capacity expansion plans, hurting job prospects. Companies have pruned wage bills and offered lower salary hikes.
In this scenario, the panel, in its economic outlook, underlined the need for bold reforms, such as FDI in multi-brand retail and raising diesel prices. Its report also said a poor monsoon could pull down farm growth rate to 0.5% from 2.8% the last fiscal, and keep inflation high at 6.5-7%.
Earlier, the RBI had pegged GDP growth rate for 2012-13 at 6.5%. “The PMEAC estimate is on the higher side. It may actually be lower at 6%,” said Ficci chief RV Kanoria.