Inflation may rise in FY14: RBI survey
In the RBI's survey, professional forecasters have raised the projection of average inflation for 2013-14 to 7.0% from 6.7% earlier. The RBI, too, noted that the high current account deficit could slow the pace of the fall in inflation going ahead. Further, inflation expectations have shown a marginal increase during October-December period, the RBI said in its macroeconomic and monetary developments report.
Even though core inflation has eased markedly, a close eye on cost-push inflation and wage price spiral is needed, the central bank said.
The RBI has projected inflation to be around 7.5% by March end. Meanwhile, despite a series of reforms since September, business sentiment and growth prospects have not improved significantly, the RBI said.
In fact, professional forecasters have cut the GDP growth rate for 2012-13 to 5.5% from 5.6%, which is lower than the RBI's projection of 5.8%. According to forecasters, both industrial and services growth will slow further to 2.8% and 5.4%, respectively, for the current financial year.
Moreover, economists expect a slower recovery than before in 2013-14. Forecasters have slashed their GDP growth projection of 2013-14 to 6.5% from 6.6% with industry growing at just 4.7% and services by 7.8%. Growth could recover in the next financial year on the
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