PMEAC lowers GDP forecast

Written by fe Bureau | New Delhi | Updated: Sep 30 2011, 07:21am hrs
The Prime Ministers Economic Advisory Council (PMEAC) on Thursday lowered its forecast for GDP growth in 2011-12 to around 8%, from its earlier estimate of 8.2%.

PMEAC Chairman C Rangarajan said persistence of high inflation, slowing industrial expansion and global uncertainties were major constraints to Indias economic growth.

Rangarajan pitched for reducing the countrys reliance on capital flows as a means to bridge the current account deficit, besides ensuring that the current account deficit does not exceed 2.5% of GDP.

Highlighting the footloose nature of global capital, Rangarajan stressed the need to contain current account deficit while lowering its dependence on capital flows as a means of finance.

Capital flows by their nature are very volatile. They are influenced both by domestic and external factors, by push factors and pull factors. Therefore, we need to moderate our dependence upon financing the current account deficit (CAD) through capital flows, Rangarajan said.