Highlights of Economic Survey 2012-13

Chief Economic Advisor Raghuram Rajan's first ever Economic Survey for the current fiscal was be tabled in Parliament. According to the Survey, WPI inflation is seen declining to 6.2-6.6 percent by March which could create more room for rate cuts going ahead. It pegs growth at 6.1- 6.6 percent in FY14.

Following are the highlights of Economic Survey for 2012-13:

GROWTH, INFLATION:

• Indian economy likely to grow 6.1-6.7 percent in FY14
• WPI inflation may decline to 6.2-6.6 percent in Mar
• Growth downturn more or less over, economy looking up
• WPI inflation is expected to continue the moderating trend
• Inflation expectation seen anchored around current target
• Diesel price hike to put upward pressure on inflation
• Rise in onion prices to put upward pressure on inflation
• Food inflation mainly driven by cereal prices this year
• Rate cuts in advanced nations may pose risk to inflation
• WPI inflation has remained muted in FY13
• Apr-Dec WPI average inflation 7.55 percent
• Non-food non-manufacturing inflation remains high
• Core inflation down on RBI action and fall in global prices
• Lower interest rates to give fillip to investments
• Industry growth still vulnerable to local, global factors
• Revival of investment in industry, infra key challenge
• Lower industrial growth due to sluggish investments

FISCAL HEALTH:

• FY13 fisc situation shows sharp improvement over FY12
• Need to stay on path of indicated fiscal consolidation
• FY13 tax mop-up growth significantly lower than Budget aim
• Medium term fiscal consolidation plan credible
• Fiscal consolidation key to higher growth, lower inflation
• Oil subsidy key fiscal risk; need to address it
• Need to up diesel, LPG prices in line with global rates
• Need to accord priority to food subsidy
• Concerns that food security bill may push up subsidy
• Tax mop-up slippage can be lowered with additional efforts
• Controlling subsidy expenditure crucial
• Need to cut subsidy via better targeting, reducing leakage
• Direct cash transfer to cut leakage in subsidies

REFORMS:

• Econ slowdown a "wake up call" for stepping up reforms
• Recent government policy steps buoyed business sentiment
• Recent government steps to help improve Indian econ outlook FY14

EXTERNAL SECTOR:

• Widening trade, current account gaps matter of concern
• Current acct gap reduction must focus on curbing imports
• Need to curb gold imports to cut current acct deficit
• Room to increase exports limited in short-run
• Must monitor overseas borrow to limit unhedged FX exposure

MISCELLANEOUS:

• FDI in retail to pave way for investment in technology.