Faced with subdued manufacturing sector performance, Prime Minister’s key advisor C. Rangarajan on Thursday lowered the growth projection for the current fiscal to 6 per cent from 6.7 per cent estimated earlier.
“The disturbing area is manufacturing, therefore one may have to revise estimates downwards. It is quite possible for the economy to pick up in second half and give a growth rate close to 6 per cent for the year as a whole,” Prime Minister’s Economic Advisory Council (PMEAC) Chairman C. Rangarajan told PTI in an interview.
The PMEAC, in its ‘Economic Outlook for 2012-13’ report released in August had projected the Indian economy to grow at 6.7 per cent.
The Indian economy grew at a faster pace of over 8 per cent in two consecutive fiscal before falling to a nine year low of 6.5 per cent in 2011-12.
Mr. Rangarajan said the economic growth in the second (July-September) quarter would be around 5.5 per cent, as recorded in the first quarter, as the recent set of industrial output data does not show any improvement.
Industrial output in the April-August period this fiscal was 0.4 per cent, down from 5.6 per cent in the same period in 2011-12.
Mr. Rangarajan said that the growth would recover in the second half on the back of good agriculture produce and some pick-up in industrial activities in the key infrastructure areas.
“I see a strong pick up in the growth of key manufacturing sectors like coal, power, road and railways. The monsoon has turned out to be little better than what was expected, therefore agriculture production may do better than what was originally expected,” Mr. Rangarajan said.
He said the growth in manufacturing production was low in the second half of 2011-12 fiscal and hence the benefit of lower base would accrue in the current fiscal, which could push up the growth.
Mr. Rangarajan said the public sector undertakings (PSUs) with huge resources should go ahead and utilise the funds in order to expand capacity, increase investment and production.
“What is needed is strong action at the ground level in order to see production and capacity creation targets as laid down for the year are achieved. This will act as catalyst to higher growth,” Mr. Rangarajan added.