New Delhi: The Indian economy would grow a little over 7 per cent this fiscal ending March 31, and it would turn around in 2012-13, the government’s Chief Economic Adviser Kaushik Basu said Tuesday.
“In the current financial year, growth rate will be less than 7.5 per cent for sure, may be just a little bit above 7 per cent,” Basu said at a press conference here.
On inflation, Basu said the overall inflation would fall below 7 per cent in January.
“The next WPI number that you get in mid-February should show that inflation has gone below 7 per cent,” he said.
The headline inflation based on the wholesale price index (WPI) fell to a two-year low of 7.47 per cent in December as compared to 9.11 per cent in the previous month, according to the latest available data.
Presenting an outlook of the economy, Basu said the Indian economy was at an ‘inflection point’ from where the things would be ‘beginning to turn around’.
“On growth scenario don’t expect a huge buoyant but we will probably turn around and I do expect that the figures are going to improve.”
“We expect the growth next year will be higher than the growth this year. Not higher by a large major and we won’t even be back to our potential but we should see improvement in 2012-13,” Basu added.
After growing at 7.7 per cent in the first quarter, India’s gross domestic product (GDP) growth fell to 6.9 per cent in second quarter of the current financial year.
Growth is unlikely to improve substantially in the third quarter as factory output has remained sluggish.
The factory output, measured in terms of the Index of Industrial Production (IIP), grew by 5.9 per cent in November after a contraction of 4.7 per cent in October.
Basu said credit to manufacturing sector has increased substantially in the last few months raising hope for a turnaround in the industrial growth.
India Tuesday revised economic growth downward to 8.4 per cent from the earlier estimate of 8.5 per cent.
GDP at factor cost at constant (2004-05) prices in 2010-11 is estimated at Rs. 4,885,954 crore, which is 8.4 per cent more than the previous year’s Rs. 4,507,637 crore.