“We do not anticipate any improvement in economic activity on account of the Budget proposals. Consequently, we have maintained our GDP growth forecast for 2012-13 at 7.6 per cent against the estimated rise of 6.8 per cent in 2011-12,” CMIE said in its monthly report.
The Centre for Monitoring Indian Economy (CMIE) has said it maintains its economic growth forecast for the current fiscal at 7.6 per cent against the estimated 6.8 per cent in the previous financial year. The Union Budget for 2012-13 failed to provide any thrust to the slacking pace of economic growth, as it has neither major reforms nor any concrete measures to enforce fiscal discipline, CMIE said, in a notification. “We do not anticipate any improvement in economic activity on account of the Budget proposals. Consequently, we have maintained our GDP growth forecast for 2012-13 at 7.6 per cent against the estimated rise of 6.8 per cent in 2011-12,” CMIE said in its monthly report.
The government raised excise duty and service tax from 10 per cent to 12 per cent in the Budget. This is expected to lead to inflationary pressure, at wholesale and retail levels. However, demand is not expected to be affected due to higher inflation, it added. “Our revised inflation forecast for 2012-13, after taking into account the duty hike, at 6.5 per cent, still reflects a fall in inflation from the high levels of 9-10 per cent recorded in the preceding two fiscal years. Easing inflation is expected to provide some leeway for the existing high interest rates to climb down, though this is expected to happen only by the second half of 2012-13,” the report said. The main driver of economic growth in 2012-13 will be the industrial sector. Growth is expected to accelerate to 6.7 per cent during the year compared to 4.1 per cent in the preceding year. Revival in mining sector output, faster growth in manufacturing sector and robust increase in electricity generation will drive the growth.
Manufacturing sector output is expected to rise at a faster pace of 5.1 per cent in 2012-13, compared to 4.1 per cent in last fiscal. A revival in growth of machinery and equipment, electrical machinery, textiles and ready-made garments sector as well as faster growth in basic metals production is expected to drive the growth in this sector. Mining sector output is expected to post a recovery from the 2.3 per cent decline in 2011-12 and grow by 5.5 per cent in 2012-13. Higher crude oil production and improvement in natural gas output is expected to be reflected in improved growth prospects for the sector.