With the Reserve Bank of India (RBI) scaling downwards its growth outlook for the Indian economy, it is now quite clear that the GDP growth in 2012-13 fiscal will be less than 6 per cent.
Releasing the Macroeconomic and Monetary Developments Second Quarter Review 2012-13 on Monday, the central bank lowered the growth projection to 5.7 per cent from 6.5 per cent earlier. “The median growth forecast for 2012-13 has been revised downward to 5.7 per cent from the earlier 6.5 per cent. Overall, the GDP growth is expected to pick up from Q4 of 2012-13,” RBI said.
At the same time, RBI said economic growth is expected to pick up pace from January-December quarter. It also added that the recent spate of policy reforms, including allowing foreign direct investment in airlines and multi-brand retail sectors, should help, albeit with some lag, in contributing to arresting the downturn.
Economic growth during the first quarter of this fiscal has remained sluggish, clocking 5.5 per cent compared to 8.0 per cent year ago.
Hinting that a cut in interest rate could be in the offing on Tuesday as RBI Governor D Subbarao presents the second quarter review on Tuesday, RBI said despite high inflation it would take steps to support growth.
“Monetary policy needs to be cautious in the interim focusing on inflation while using the available space to support growth to the degree it can,” RBI said in the review.