Challenges ahead for the Indian economy: ASSOCHAM

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SME Times News Bureau | 25 Apr, 2013
Industry body ASSOCHAM expressed optimism on ongoing performance of the economy, but expressed concern over a number of challenges, including alarming current account deficit, slowing down FDI inflow, falling rates of domestic savings, and regulatory obstacles.

Reacting to the Economic Advisory Council to the Prime Minister (PMEAC) 6.4% GDP growth projection in the current fiscal, ASSOCHAM Secretary General D S Rawat said, "The raising incremental capital output ratio revealing that capital invested is not yielding commensurate output growth reflects the presence of systemic inefficiencies. Falling rates of domestic savings is the next important concern."

He added that current account deficit has widened to an alarming level of 5.1 percent in 2012-13. Net FDI inflows at mere $18 billion indicate the loss of foreign investor confidence in Indian growth story. On the other hand, it is expected to see 6 percent inflation for 2013-14.

Rawat said that the policy suggestions made in this regard for addressing the above mentioned macroeconomic imbalances like removal of regulatory obstacles that come on the way marketing agriculture produce, speedy project clearances are appreciable. However, their effective implementation remains the key challenge in India for long time.

The Economic Advisory Council to the Prime Minister, headed by former Reserve Bank of India governor C Rangarajan Tuesday said that the economy is expected to grow 6.4% in the current fiscal powered by an improvement in the farm, industry and services sectors but sustained reforms in critical areas is needed to accelerate expansion.