Highlights of the 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% by March which could create more room for rate cuts going ahead. It pegs growth at 6.1- 6.6% in FY14.

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

GROWTH, INFLATION

- Indian economy likely to grow 6.1-6.7% in FY14
- WPI inflation may decline to 6.2-6.6% 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%
- 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.

Source : Equity Bulls

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