New Delhi: Cautioning that global developments would continue to impact India's growth story, the Economic Survey Wednesday pegged the growth rate for 2013-14 at a conservative level of 6.1-6.7 per cent.
"...The overall economy is expected to grow in the range of 6.1 to 6.7 per cent in 2013-14," the pre-Budget Economic Survey tabled by Finance Minister P Chidambaram in Parliament said.
The economy is projected to grow at 5 per cent in current fiscal, the lowest in a decade. It was 6.2 per cent in 2011-12 and 9.3 per cent a year ago.
The projections for the next fiscal takes into account normal monsoon, moderation in inflation rate and mild recovery in global growth.
"While India's recent slowdown is partly rooted in external causes, domestic causes are also important," it said, adding boost to consumption coupled with supply side constraints led to higher inflation.
It said the growth story is unlikely to get support from the global economic developments and would remain tied to movement in international oil prices.
Chief Economic Advisor Raghuram G Rajan in his introduction to the Survey said: "These are difficult times, but India has navigated such times before, and with good policies it will come through stronger."
Rajan prescribed shifting national spending from consumption to investment, removing the bottlenecks to investment, growth and job creation, besides making efforts to reduce cost of funds.
Referring to the price situation, the Survey said that elevated food inflation would continue to remain an area of concern with inflation rate gradually inching towards double digit in December 2012.
The survey also cautions easy money policy of major developed and developing nations could aggravate inflationary expectations in the country.
"The positive effect of continuous policy easing by the major advanced and developing countries could pose a higher risk to inflation expectations and may be considered as an upside risk to inflation forecast," said Chidambaram.
"Inflation has eased in almost all major advanced and emerging market economies in the current year," it said.
As far as India is concerned, it said, the average wholesale prices-based inflation in 2012 (April-December) moderated to 7.55 per cent from 9.35 per cent in the corresponding period of the previous year.
Inflation further eased to three-year low of 6.62 per cent in January as compared to 7.23 per cent in the same month last year.
With moderation in non-food manufacturing sector and global commodity prices, the headline inflation may decline to 6.2-6.6 per cent in March 2013.
Prescribing ways to control the price rise, the Survey said: "Apart from monetary policy attempting to control demand, supply side responses will be necessary to bring down inflation in a sustained way, and ongoing policy initiatives need to be pursued."
Given that India faces a number of constraints on the supply side, in the short run, curbing demand for commodities moderately to catch up with supply may be an effective tool, the Survey said.