NEW DELHI : A “decisive pick-up” in economic activity can be gradually expected in the Indian economy over the next few quarters, the Mid-Year Economic Analysis for 2013-14 said.
The report noted that despite cuts in government spending, private consumption expenditure and gross fixed capital formation have increased. “These trends indicate that the structural reforms undertaken by the government have started to bear fruit, and a decisive pick-up in economic
activity can be gradually expected over the next few quarters,” the report tabled in Parliament today said. The projections in the mid-year review would have been made in December before the latest set of data on GDP and inflation came in as it was supposed to be laid in Parliament in December.
In the first half of 2013-14 (Apr-Mar), the Indian economy grew 4.6%, compared with 5.3% in the same period of the previous fiscal. The review pegged India’s 2013-14 growth at 5.0%, in line with Central Statistics Office’s advance estimate released last month. However, it may take some more time for the economy to reach its higher growth potential, it said.
The inflation rate based on Wholesale Price Index needs to be controlled below 6% for the Reserve Bank of India to support economic growth, the government said. “Controlling inflation further (WPI inflation below the level of 6%), so that necessary leeway is available to the RBI to support economic recovery,” the report said.
Headline inflation, based on the Wholesale Price Index, fell to a five-month low of 6.16% in December from a 14-month high of 7.52% in the previous month.
The commerce and industry ministry will release the WPI inflation rate for January on Friday. -Cogencis