Some improvement expected in Indian economy after a bad 2013

Dec 31 2013, 12:00 IST
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In a recent forecast, IMF lowered the growth projection to 3.75 per cent in 2013 from 5.7% estimated earlier. (AP) In a recent forecast, IMF lowered the growth projection to 3.75 per cent in 2013 from 5.7% estimated earlier. (AP)
SummaryIn a recent forecast, IMF lowered the growth projection to 3.75 per cent in 2013 from 5.7% estimated earlier.

Slowing growth and rising inflation marked 2013 which the country's economic managers would like to forget quickly in the hope that the new year will bring in new government and some good news.

The growth rate continued to slide throughout the year despite desperate attempts by the government to stem the tide with a host of traditional and innovative measures.

Pangs of inflation, driven mainly by rising prices of essential food items, added to the overall despondency in a year that saw the rupee dipping to its life time low level against the US dollar and the Current Account Deficit (CAD) soaring to historic highs.

Everything began well with the Finance Ministry's Economic Survey in February asserting that the growth rate during 2013-14 would improve to 6.1-6.7 per cent, from decade's low of 5 per cent recorded in the previous fiscal.

The euphoria was short-lived as the government efforts to boost growth have come a cropper with the economy slipping further into the quagmire and key parameters showing no signs of bottoming out.

Growth rate during April-September slipped to 4.6 per cent from 5.3 per cent in the same period last fiscal, and it is doubtful that the full financial year would show an uptrend.

Finance Minister P Chidambaram as well as Reserve Bank Governor Raghuram Rajan tirelessly, yet unconvincingly, tried to assure the industry and the people that the growth rate in 2013-14 would be above 5 per cent or would not fall below the decade's lowest level witnessed last fiscal.

On the other hand, institutions such as the International Monetary Fund, the World Bank and the Asian Development came out with estimates of the country's growth, but none projected over 5 per cent expansion rate during the current fiscal.

In a recent forecast, IMF lowered the growth projection to 3.75 per cent in 2013 from 5.7 per cent estimated earlier. It, however, forecast about 5 per cent in 2014.

Similarly, ADB lowered India's growth forecast for 2013-14 to 4.7 per cent from 6 per cent earlier. Like IMF, it too expects some improvement in the next fiscal and has projected a growth of 5.7 per cent. Other organisations have forecast a similar trend. Prime Minister's Economic Advisory Council (PMEAC) had lowered the growth forecast to 5.3 per cent from 6.4 per cent. RBI had lowered the growth projection for 2013-14 to 5.5 per cent from its earlier estimate of 5.7 per cent.

Besides trying to prop up growth,

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