Indian economy set for growth over manufacturing and monsoon: C Rangarajan

Written by PTI | New Delhi | Updated: Nov 14 2013, 01:10am hrs
C RangarajanThe economy grew by 4.4 per cent in the first (April-June) quarter of current fiscal. Reuters
Indian economy will see "distinctlybetter" growth in the second half of the currentfiscal on improvement in manufacturing and good monsoon thisseason, PMEAC Chairman C Rangarajan said today.

"I think it (growth) will happen. For the second half ofthe year, it will be distinctly better," Rangarajan toldreporters on the sidelines of an industry event here.

"The impact of the good monsoon will be only seen in thesecond half. Apart from increasing agricultural production,this will also increase the rural demand," he said at a CIIseminar on Financial Inclusion for Reviving Growth.

Besides, Rangarajan said, there has been improvement inthe manufacturing sector and in the second half of the currentfiscal the growth of this sector could be about 3 per cent.

"As far as manufacturing is concerned, we have seen someimprovement... Going ahead, in the second half of the year, wethink that the manufacturing growth rate will be about 3 percent," he said.

"Therefore, for the year (2013-14) as a whole, it will beabout 1.5 per cent which will be consistent with an aggregategrowth rate of the economy of a little over 5 per cent," headded.

The economy grew by 4.4 per cent in the first (April-June) quarter of current fiscal. In 2012-13, the GDP growthfell to a decade low of 5 per cent.

Rangarajan said the impact of various measures that thegovernment has taken in the recent past will be seen in thesecond half only.

He also maintained PMEAC's growth projection of about 5.3per cent which can be achieved with the present trend in themanufacturing.

The Prime Minister's Economic Advisory Council hadinitially projected growth target of 6.4 per cent for 2013-14which was lowered to 5.3 per cent in September.

In reply to a question as to whether India is ready tocope with the financial stress that might arise due to the USfiscal tapering, Rangarajan said: "I think we must get readyfor it because we don't know when it will happen. The goodnews is that the current account deficit is coming down.

"In fact the CAD should be much lower than what one hadexpected. If the CAD come down below 3 per cent of the GDP,the capital flows should be adequate to control the CAD."

Finance Minister P Chidambaram said last month that Indiawill be able to contain CAD below USD 60 billion in 2013-14 asagainst an earlier estimate of USD 70 billion.