Indian economy is expected to grow at 6.4 per cent during 2013-14: PMEAC

New Delhi: The improvement in performance of agriculture and manufacturing sectors is expected to boost the economic growth rate to 6.4 per cent in 2013-14 from 5 per cent during 2012-13, according to Prime Minister’s Economic Advisory Panel.

"Economy will grow at higher rate from now. We projected growth rate of 6.4% in the current fiscal", said Mr C Rangarajan, Chairman, Prime Minister's Economic Advisory Council (PMEAC), during the release the Economic Review for 2012-13.

The improvement in the growth rate in the current fiscal, will be on the back of better performance of agriculture, industry and services sectors, he added.

The agriculture sector is expected to grow at 3.5 per cent in 2013-14 as compared to 1.8 per cent during previous fiscal. The industry and services sectors are expected to grow at 4.9 per cent (3.1 per cent in 2012-13) and 7.7 per cent (6.6 per cent in 2012-13) respectively.

The policy and administrative actions such as the recently constituted Cabinet Committee on Investment can help overcome obstacles in the speedy execution of projects. The existing rates of investment should enable us to grow at 7.5 per cent to 8 per cent over the short term, a return to higher levels of savings and investment can take India back to the very high levels of growth, said Mr Rangarajan.

If India grows at 8 per cent-9 per cent per annum, "we will graduate to the level of a middle income country by 2025," he added.

The PMEAC has projected higher inbound foreign direct investment (FDI) at US$ 36 billion during 2013-14. The net FDI inflow in 2012-13 was US$ 18 billion (US$ 26 billion inbound and US$ 8 billion outbound). Outbound FDI is also expected to increase, resulting in net FDI inflow of US$ 24 billion in 2013-14, highlighted the PMEAC.

The action taken by the Government of India to speed up project clearances since September would be visible in the current fiscal, said Mr Rangarajan.

The Government of India will have to maintain an attractive return in financial assets for bringing down the demand of gold. The price and subsidy reforms in petroleum products is also needed to be completed to control oil import bill, he added.

"Non-food manufacturing inflation remains around the comfort zone. As inflation comes down, it will create more space for monetary policy to support growth," he said.