A survey by industry body Ficci has lowered India's economic growth outlook for 2013-14 fiscal to 5 per cent, from 6 per cent projected in July, indicating tough times ahead.
"Economic growth in the current year would be restrained and we should be prepared for another year of slow growth. The median forecast for GDP growth in 2013-14 by the participating economists stands at 5 per cent," Ficci's Economic Outlook Survey said.
The survey results also indicate that inflation risks have resurfaced, with headline inflation rate expected to be around 6 per cent by March 2014.
Besides, it estimates that the rupee will hover in the range of 62-65 per US dollar in the near future.
"The expectation of reduced foreign capital inflows and still high (though moderating) Current Account Deficit (CAD) has shaped this view on the rupee movement," the survey said.
Elevated food prices and the sharp fall in the rupee value continue to put pressure on prices, it added.
The survey said that although some positive developments -- good monsoons, better performance of agricultural sector, improvement in exports and clearances to infrastructure projects -- make the case for recovery a little stronger, it will take some more time to witness firm signs of turnaround.
The survey further revealed that expectations with regard to performance of the industrial sector have also taken a hit. The participating economists expect Index of Industrial Production (IIP) to grow by 1.7 per cent in FY'14, which is half the 3.5 per cent growth that was projected in the previous round of the survey held in July 2013.
On the external front, the CAD to GDP ratio is expected to witness an improvement in the second half of the fiscal. This ratio is estimated at 4.5 per cent for Q3 FY14 and at 4 per cent for the year 2013-14.
"It will be important to look at both export and import side of the trade equation if CAD is to be brought under control," the survey said.
To rationalise the gold demand, economists said that Indian investors should be given alternatives to gold as a hedge against