The storm has passed, now all hands on deck

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fe Bureau: New Delhi, Feb 28 2013, 02:43 IST

Admitting that “forecasting at potential turning points is difficult”, Raghuram Rajan, the main author of the Economic Survey 2012-13 tabled in Parliament on Wednesday, went on to predict a “wide range” of 6.1-6.7% for India’s 2013-14 real GDP growth. Although a bit conservative by government standards, the growth estimate in the survey is almost in line with that of most private economists.

Even as the economy is in the doldrums with sharp falls in growth rates of investments, savings and consumption, Rajan, chief economic adviser in the finance ministry, opting to look at the brighter side of things, celebrated the country’s much-touted demographic dividend and said that with some special effort, this could be converted into “real dividend” for the economy.

According to the survey, “The way out lies in shifting national spending from consumption to investment; removing the bottlenecks to investment, growth and job creation, in part, through structural reforms, combating inflation both through monetary and supply side measures.” A former chief economist to the International Monetary Fund (IMF), Rajan gave a variety of specific prescriptions to spur growth over the medium to long term while endorsing the “sustainable and inclusive growth” paradigm. He also called for a greater focus on the supply side.

Widening the tax base, Rajan said, was central to the immediate fiscal deficit reduction agenda, adding that the target of 5.3% of GDP in 2012-13 would be met, despite a “significant shortfall” in revenue (independent analysts see revenue receipts falling 8-9% short of target thanks to the growth

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