Terming the economic performance in the current fiscal as "disappointing", the government's Economic Survey today expressed the confidence that an upswing is imminent and growth rate would rebound to 7.6 per cent in 2012-13, though challenges to contain inflation would remain.
Attributing the decline in economic growth, which is projected to be at three-year low of 6.9 per cent in 2011-12, to global and domestic factors, the Survey, said, "There are signs from some high frequency indicators that the weakness in economic activity has bottomed out and a gradual upswing is imminent".
The economic growth in the current fiscal is expected to slip to 6.9 per cent from 8.4 per cent in the previous two years. India was growing at over nine per cent before the global financial crisis pulled down the growth to 6.7 per cent in 2008-09.
On future prospects, the Survey, an official account of the performance of the economy, said, "The growth rate of real GDP (is expected) to pick up to 7.6 per cent (plus or minus 0.25 per cent) in 2012-13 and faster beyond that." The growth rate will further improve to 8.6 per cent in 2013-14.
Referring to the major challenges, the Survey said, the government would need to focus on fiscal consolidation, inflation management and reforms of direct and indirect taxes, besides initiating steps to deal with the menace of corruption.
It further said that likely easing of inflationary pressure and subsequent reduction in interest rates would fuel economic growth, though cautioned that rising crude prices in the international market would continue to put pressure on prices.
The Survey said the slowdown in economic growth should act as "a wake-up call" for the government and the RBI to address the domestic issues hampering recovery.
Referring to tight monetary policy, persistently high inflation and slowing investment and industrial activity, it said, "there is room and need to be innovative in terms of policy; the slowing of economy is a wake-up call in that respect".
The Survey said that inflation would come down to 6.5-7 per cent by March end. "Reining in inflation and containing inflationary expectations will continue to be important objectives of monetary policy; the shift to growth objectives has started. As inflation eases, it will open up opportunities to reduce policy rates," the Survey said.
The fiscal deficit, it said, will narrow to 4.1 per cent in 2012-13 fiscal. For the current fiscal, it is widely expected that the