India's economy is expected to grow an annual 7.1 percent in the current financial year that ends in March, and 7.5 to 8 percent in the next financial year, C. Rangarajan, chairman of Prime Minister Manmohan Singh's economic advisory council said.
"We might be able to achieve 8 per cent growth on our esteem ... if the world environment is favourable, we will be able to achieve high growth rate," the Chairman of the Prime Minister's Economic Advisory Council (PMEAC), C Rangarajan, said.
Rangarajan added that with easing inflation, the manufacturing and the mining sector are likely to grow by 7.5 percent and 6 percent, respectively in the financial year 2012-2013.
He, however, said there are serious concerns over the country's current account deficit and that the government must provide tough decisive measures in the forthcoming Union Budget to tame this deficit.
While admitting that manufacturing has not been doing well, he said FY12 farm growth is seen higher at 3 percent. Economic growth for the coming year is seen at 7.7 percent to 8 percent on back of strong growth in manufacturing and the mining sector. Rangarajan also said that India needs to work hard towards achieving fiscal consolidation provided the government takes corrective measures. In order to bring down the current account deficit tax to GDP ratio needs to be brought to pre-crisis levels, he pointed out.
On foreign exchange fluctuation, Rangarajan voiced concern over the appreicating rupee which may no be good for the economy as it may not promote exports.
He added that in FY12-13, gold imports are likely to fall to $38 billion from $58 billion this year on back of attractive rate of returns on India's financial assets.
Rangarajan projects inflation to be around 6.5 percent by March-end and 5.6 percent in the next fiscal.
The economy has lost momentum as eurozone debt woes coupled with high interest rates and policy paralysis at home have hit capital investment.
It is hoped that eurozone will soon find a solution to the ongoing crisis .Germany is more forthcoming in providing this relief. US economy is better than Europe, but overall situation will be tight. The coming year is expected to be sans any shock.
The government earlier this month cut its economic growth forecast for the current fiscal year to 6.9 percent, the slowest pace in three years.