As economic activity continues to increase, the prime minister's economic advisory council (PMEAC) expects GDP to grow by more than the 7.2 per cent projected by the Central Statistical Organisation (CSO) during the current fiscal, and exceed 8 per cent in 2010-11. The latest projection is also higher than the 6.5 per cent the PMEAC had forecast in October.
"We are making an initial estimate that the economy would grow by 8.2 per cent in 2010-11 and by 9 per cent in 2011-12," PMEAC chairman C Rangarajan said on Friday while releasing the annual economic outlook, which traditionally precedes the union budget and is considered to reflect the government's economic perceptions and priorities.
|PMEAC chairman C Rangarajan |
At the same time, he suggested that the government should initiate fiscal consolidation measures in the forthcoming budget, as the current level of fiscal and revenue deficits is unsustainable.
While the contents of the economic survey are yet to be studied, it has reportedly stressed that it is time to start withdrawing the government's fiscal stimulus packages that helped the economy to beat the global economic slowdown.
The council has pegged growth for the current fiscal at 7.5 per cent, revising upwards its last October forecast of 6.5% GDP growth, on the back of industrial expansion and growth in the services sector, though agriculture is expected to contract this fiscal.
The PMEAC has also raised its projection for industrial expansion to 9 per cent from 8.2 per cent. Services too are projected to grow at a similar pace, while agriculture sector is likely to register a negative growth.