Indian Economy to grow at 6.7%, agriculture & allied activities at 0.5%, industry at 5.3% and services at 8.9% during 2012-13. The advanced economies are in dark mood, especially in Europe. The slower growth in the US and in the EU will have an adverse impact on the expansion of these markets for India’s exports, both of goods and services. Asia will be under pressure for the most part because of pressure on its final export markets in the West, and also from the domestic factors including demand for higher wages and the rising burden of energy costs. However, growth rates in many Asian countries suggest that developing economy demand will remain reasonably buoyant. Indian economy is expected to grow at 6.7% consisting agriculture & allied activities to grow at 0.5%, industry at 5.3% and services at 8.9% during 2012-13.
 Snapshot of economic outlook for 2012-13
|
Sector/Area |
Outlook for 2012-13 |
| GDP growth at Factor cost |
 Economy is expected to grow at 6.7% in 2012-13 |
| Agriculture and allied activities |
Agri GDP is projected to grow  at 0.5%in 2012-13 due to the impact of weak monsoon on agriculture and the current reservoir storage position in 2012-13 as against 2.8% in 2011-12. |
| Manufacturing sector |
It is projected to grow at  4.5% in 2012-13. Electricity, automotive, steel and cement sector have shown  improvement in the period of April-June. Due to the benefits of the low base, manufacturing sector will show improved performance in the second half of this year. |
| Mining & Quarrying  sector |
Mining for the year as a whole expected to grow at 4.4 % due to growth in the coal and lignite sector, and some recovery in iron ore as against de growth of (-)0.9% in 2011-12. |
| Electricity generation |
Electricity generation expected to continue to grow at an average pace of around 8% in 2012-13. |
| Construction | Construction is expected to grow at 6.5% in 2012-13 due to the recent increase in the output of steel and cement. |
| Services sector | In Services sector, some improvement is expected particularly in the large transport, trade and communications sector and it is expected to grow by 8.95 in  2012-13. |
| Inflation | Deficient SW monsoon likely to have an adverse impact on the prices of primary food items, especially on those where the ability of government stocks to play a moderating role is not there. Inflation rate is expected to be within the range of 6.5 to 7.0% at the end of 2012-13. |
| Fiscal balance | Fiscal health of the states is better and the aggregated fiscal deficit of the states stands at 2.3% of GDP in 2011-12 and is expected to reach at 2.1% in 2012-13(BE). |
| The fiscal deficit for the Centre was 5.89% of GDP in 2011-12 and is estimated to reach at 5.06% in 2012-13(BE). | |
| The consolidated fiscal deficit of the Centre and the State governments for 2011-12 (RE) was 8.2%of GDP. The consolidate deficit based for 2012-13 is estimated to be 7.2 %(BE). |
|
| The containment of the fiscal imbalance at the Centre rests on the management of the subsidy bill, especially that on refined petroleum products and by increasing the Tax-GDP ratio. |
|
| Introduction of the General Sales Tax on Goods & Services (GST) would be a very important milestone in the path of tax reform. It requires considerable negotiations, bargaining and preparatory work in relation to both the structure and operation of the tax. |
|
| Gross Domestic Fixed Capital Formation | Gross Domestic Fixed Capital Formation as a proportion of GDP has fallen from its highest level of 32.9% in 2007-08 to 30.4 % in 2010-11 and to 29.5 per cent in 2011/12. It is projected to reach at 30.0% in 2012-13. |
| Domestic saving rate | Domestic saving rate has declined from 32.0% in 2010-11 to 30.4% in 2011-12 and is projected to be at 31.7% in 2012-13. |
| Current Account Deficit |
Current Account Deficit was $78.2 billion (4.2% of GDP) in 2011-12 and is projected at 67.1 billion (3.6% of GDP) in 2012-13. |
| The merchandise trade deficit was US$189.8 billion (10.2%of GDP) in 2011-12 and projected to reach at US$181.1 billion (9.7%of GDP) in 2012-13. |
|
| Overall the net balance on invisibles was US$111.6 billion (6.0% of GDP) in 2011-12 is expected to grow at US$114 billion (6.1% of GDP) in 2012-13. | |
| Capital flows |
Capital flows were US$67.8 billion (3.7% of GDP) in 2011-12 and projected at US$73.2 billion (3.9% of GDP) in 2012-13. |
Source: PHD Research Bureau, compiled from Economic
Outlook for 2012-13
Measures to accelerate the Economic growth
Integrated decision-making on high-impact infrastructure projects–For Projects costing in excess of a minimum threshold, say Rs 5,000 crore, a Cabinet Committee comprising of ministers in charge of concerned departments should take an integrated view. The Cabinet Committee on Infrastructure could
be recast as the Cabinet Committee for Sustainable Development of Infrastructure for this purpose, and its composition as well as powers under the rules of business modified accordingly.
Permitting FDI in multi-brand retail–For channelling transfer of capital and technology, FDI in multi-brand retail up to 49 per cent may be allowed to attract investment in this sector. Such of the states as are receptive to the idea may implement this.
FDI and other reforms in the Aviation sector–FDI in civil aviation may now be allowed to the existing extent of 49 per cent for foreign airlines as well.
Containing petroleum products subsidies–Given the huge subsidy projection for the current financial year, priority consideration may be given to a suitable increase in the price of diesel in one or more steps, and  a cap on the level of consumption of subsidised domestic LPG close to what is currently being consumed by poorer households, i.e., 4 cylinders.
