STATESMAN NEWS SERVICE
New Delhi, 1 October
Pinning its hopes on higher agricultural productivity and investments, the government today expressed optimism that the economy will grow by over five per cent in financial year 2013-14 and the current account deficit (CAD) will be restricted to 3.7 per cent of gross domestic product (GDP). It also promised to take more steps to boost growth.
The CAD is expected to be less than $70 billion or 3.7 per cent of GDP for the full fiscal, the economic affairs secretary, Mr Arvind Mayaram, told a Press briefing here.
“It (GDP) will be more than five per cent, it cannot be less than five per cent,” Mr Mayaram asserted when queried on analysts estimating that growth could be lower than five per cent in 2013-14.
Growth would improve in the second quarter of the current fiscal, mainly on account of increase in the sown area, acceleration in the pace of plan expenditure and impact of projects cleared by the CCI (Cabinet Committee on Investment), he said.
“As we are seeing growth clawing back, I am quite sure that the environment will be conducive for further incentivising of growth and we will see whatever steps have to be taken,” Mr Mayaram said.
He said there have been signs of improvement in the manufacturing, electricity and capital goods sectors in July and the eight core industries too showed a pickup in growth at 3.7 per cent in August.
The growth of the consumer durables sector of the country, which was negative in July, would pick up in the remaining quarters on account of festival demands, he said.
The economy grew at a four-year low of 4.4 per cent in the April-June quarter of the current year. In fiscal 2012-13, the growth was at a decade’s low level of five per cent.
“The Q2 GDP growth should be better than first quarter. We need to incentivise growth. As far as the interest rate is concerned, it is completely the domain of the RBI, and the Governor will take a call on that,” the economic affairs secretary said.
The RBI is scheduled to announce its second quarter policy review on 29 October.
The CAD, he said, was expected to be less than $70 billion or 3.7 per cent of GDP for the full fiscal.
The “elevated level” of CAD at 4.9 per cent in the June quarter was mainly due to gold imports, which would be restricted below 800 tons this year, he added. The imports were 845 tons last year.
“We would certainly hope CAD would be less than $70 billion. The CAD will be fully and safely financed without any recourse to dipping into reserves,” Mr Mayaram said.