NEW DELHI – India’s economy will grow 6.7 percent in the current fiscal year, an advisory panel to the prime minister forecast on Friday, saying that an ongoing slowdown was of “great concern”.
India’s gross domestic product expanded at near double-digit rate for much of the past decade but fell to 6.5 percent in the year to March, triggering fears that the country’s rapid development was under threat.
“The growth rate in 2011-12 was low, it came down to 6.5 percent,” C. Rangarajan, chairman of the economic advisory council to Manmohan Singh, told reporters in New Delhi.
“The decline in the growth rate is a matter of great concern to us,” he said. “We expect the growth rate to be a shade better in the current fiscal (year).”
The council also forecast that inflation in the year to March 2013 would be between 6.5 and 7.0 percent, above the central bank target of around five percent, because of food price rises after a poor monsoon.
The growth forecast was in line with the prime minister’s own predictions that the rate would narrowly exceed last year’s 6.5 percent.
Opposition leaders and many independent economists have dismissed such figures as overly optimistic.
Ratings agency Moody’s last week scaled down its growth outlook for Asia’s third-largest economy to 5.5 percent for the year to March 2013.
On Sunday, the prime minister used his Independence Day speech to vow to improve conditions for foreign investment to help revive the economy, which has been hit by a tight monetary policy and global uncertainty.
Rangarajan called for the government to tame inflation and push through reform in the retail and aviation sectors to allow more investment by overseas companies.