Zeebiz Bureau
New Delhi: Amid a difficult global economic scenario, the Prime Ministers's Economic Advisory Council (PMEAC) blamed the government for having “lost time” in getting its act together despite a stable atmosphere in the wake of the May 2009 polls.
Presenting the Economic Outlook for 2011-12, the council said, India's GDP growth will slow down to 8.2 percent in the current fiscal and the inflation rate is expected to remain high at 9 percent till October.
In its report on the state of economy, the PMEAC said: "The projected growth rate of 8.2 percent, though lower than the previous year, must be treated as high and respectable given the current world situation."
It further said that the global economic and financial situation was unlikely to improve (in the foreseeable future) and this could impact the domestic economy.
The Indian economy grew by 8.5 percent in the last fiscal, ended March 31, 2011.
The PMEAC's projection for 2011-12 is higher than the 8 percent growth forecast made by the Reserve Bank in its annual monetary policy, but it is lower than the government's target of 8.5 percent.
On inflation, the PMEAC said that it was likely to come down to 6.5 percent by March, 2012, but would remain high at 9 percent till October.
"There will be some relief starting from November and (inflation) will decline to 6.5 percent by March, 2012," it said.
Hinting at further interest rate hikes, the PMEAC also said the RBI would have to continue with its monetary tightening policy measures to contain inflation.
The RBI has already hiked benchmark rates 11 times since March, 2010, as part of efforts to tame inflation.
Headline inflation has been above 9 percent since December, 2010.
To contain inflation, the PMEAC suggested that the government liberally release food stocks.
"Important role for fiscal policy (is) to contain demand pressure. (There is also) need to ensure that the fiscal deficit does not exceed the budgeted level," it said.
The PMEAC asked the government to increase its efforts for revenue collection and to reduce cases of tax arrears.
It also suggested minimising avoidable expenditure and resolving the issues with states that are holding up introduction of Goods and Services Tax (GST).
The PMEAC report also said that capital flows this fiscal were likely to rise to USD 72 billion from USD 61.9 billion in 2010-11.
The FDI inflows were projected at USD 35 billion, up from USD 23.4 billion in 2010-11. However, the FIIs were likely to infuse just USD 14 billion, less than half of the USD 30.3 billion they pumped into the country in the previous fiscal.
Among the key concerns for the economy, the PMEAC said there was disparity among the states in terms of growth.
For the power sector, it called for reforms and immediate policy measures to ensure coal availability, smooth land acquisition and environment clearances.
It also pitched for food security by way of providing a legal entitlement to the poor to subsidised food through appropriate legislative measures.
It also called for reforms in the PDS (Public Distribution System) by way of computerisation, introduction of smart cards and use of unique identification numbers.
With PTI inputs
