New Delhi: Unfazed by decline in December industrial output, Prime Minister's Economic Advisory Council Chairman C Rangarajan on Tuesday exuded the confidence that the economy will bounce back and grow between 6-7 percent in the next financial year.
"I believe that in the next fiscal we should be able to grow at 6-7 percent and 8 percent thereafter," Rangarajan said at a book release function here.
Rangarajan's comments came on a day when official data showed industrial output declining by 0.6 percent in December due to poor performance of manufacturing and mining sectors, and drop in production of capital as well as consumer goods.
He emphasised the need to kick-start investments to get back to the high growth trajectory.
"Our investment rate has fallen but it is still growing at a rate of 30 to 32 percent ... We need to look at the fact that we have not been getting the full benefits of the investments that we have put in. If we activate these investments, we can get a higher growth," Rangarajan said.
The Central Statistical Organisation in advance estimates last week pegged economic growth in 2012-13 at 5 percent, as against the government projections of 5.7-5.9 percent.
Finance Minister P Chidambaram had, however, said, "There are signs of upturn and that will take us back to high growth path...We believe growth will be closer to 5.5 percent rather than CSO's estimate of 5 percent."
The government is committed to treading the path of fiscal consolidation, Rangarajan said, adding "fiscal deficit in current year will be close to targeted 5.3 percent".
The government has revised upwards the fiscal deficit target for 2012-13 to 5.3 percent of the GDP from the 5.1 percent earlier because of increasing expenditure and lower-than-estimated revenue realisation.
Pointing out the reasons for high current account deficit (CAD), Rangarajan said: "The CAD has been high due to a variety of factors -- excessive import of gold plus demand for our exports has been coming down.
"Whereas our economy continues to grow at a relatively higher rate as compared to Europe or other developed countries, so our imports continue to be a little strong".
Reserve Bank Governor Duvvuri Subbarao had yesterday cautioned that the country was headed for the highest ever CAD, which is the gap between forex gained and forex spent, this fiscal after it rose to 5.3 percent of GDP in the second quarter.
First Published: Tuesday, February 12, 2013, 15:56