New Delhi: Pinning hopes on improvement in governance and speeding up of reforms, Chief Economic Advisor Kaushik Basu Tuesday expressed confidence that the GDP growth rate would accelerate in 2012-13 from little over 7 percent expected this year.
"We expect the growth next year to be higher than the growth this year, not higher by a large measure,... but we should see an improvement in 2012-13," he told reporters here.
Meanwhile, Chairman of Prime Minister's Economic Advisory Council C Rangarajan said the economic growth in 2012-13 is expected between 7.5 percent and 8 percent.
While there are reasons to believe that the Indian economy is on a path of cyclical upswing, Basu said that speeding up policy reforms and good governance were paramount for high growth.
"First of all we will have to improve our governance and do better on reforms which, I believe we will begin to do very very soon..," he said.
Basu said given the global economic scenario and domestic factors, the GDP growth this fiscal would be less than 7.5 percent (+,- 0.25 percent) projected earlier.
"We had said it will be 7.5 percent with a small band around it. I am afraid we will be at the bottom end of the band...the growth rate will be less than 7.5 percent for sure, may be just a little above 7 percent," he said.
The CSO is scheduled to release the Advance Estimates on GDP for the current fiscal early next month.
The global economic climate too should improve for high economic growth, he added.
He further said that though the economic growth may continue to remain lower than the growth achieved in the previous year, there are certain positive signs which indicate a continuing momentum in the industrial sector, particularly in the manufacturing sector.
There was a sharp improvement in industrial performance in November and overall growth bounced back to 5.8 percent against a contraction of 4.7 percent in October.
Credit growth in the manufacturing sector in November was at 21.8 percent year-on-year. HSBC's seasonally adjusted Purchasing Managers's Index also had an upward movement in the sector during December.
Basu said another factor that could lead to resurgence is the positive outlook for inflation.
"With the recent moderation in the WPI and expected decline in the months to come with attendant implications for monetary policy, the investment could pick up momentum," Basu added.