Abingdonboy
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London: Indias economic growth is likely to rise to 7.7 percent in calendar year 2013, but growth rate through much of this year is likely to remain subdued, OECD said on May 22.
According to the Organiza-tion for Economic Cooperation and Develop-ments (OECD) latest Economic Outlook, Indias growth rate is likely to slow to 7.1 percent in 2012 from 7.3 percent in 2011, but would inch up to 7.7 percent in 2013.
The governments fiscal consolidation plans this year would help reduce inflation, narrow the current account deficit and promote more balanced growth, OECD said.
Economic worries over the past few months like rupee depreciation, high inflation and current account deficit have acted as big dampeners for the India growth story, which was seeing a growth rate of 8-9 percent during pre-global crisis.
The Indian economy has slowed owing to weakness in manufacturing and investment spending. Meanwhile, softening external demand and rising imports have resulted in a widening current account deficit (CAD).
CAD arises when a countrys imports are more than exports. CAD stood at around $45.9 billion, or 2.7 percent of the GDP in FY11.
The CAD is projected to be around four percent (or $77 billion) of the national GDP in FY13.
Regarding inflation, OECD said although inflation has moderated from double-digit rates, it remains relatively high and expected increases in regulated prices of some oil-related products will add to price pressures which will continue to weigh on household consumption.
GDP growth across the OECD is projected to slow from an annual rate of 1.8 percent in 2011 to 1.6 percent in 2012, before recovering to 2.2 percent in 2013.
With slow growth, high unemployment and limited room for maneuver regarding macroeconomic policy space, structural reforms are the short-run remedy to spur growth and boost confidence, OECD Secretary General Angel Gurria said
Indian economy to grow at 7.7% in 2013: OECD