The Prime Minister’s Economic Advisory Council on Monday lowered the economic growth projection, said inflation would remain high for another few months and forecast that foreign institutional flows would more than halve. Economic Outlook 2011-12, prepared by the panel economists headed by C Ranjagaran, aformer RBI governor, said the Indian economy would grow 8.2%, compared to earlier estimates of 9% expansion. The revised estimates are closer to RBI’s projection of 8% growth, and lower than the finance ministry’s estimation of 8.6%. The only silver lining appears to come from the service sector, which is projected to expand by 10% this year, as against 9.4% last year. But higher interest rates and increased prices are expected to take a toll on industrial output where growth is expected to slow from last year’s 7.9% to 7.1% this year. And, high base would result in moderation of agricultural production rise from 6.6% in 2009-10 to 3% this year. Rangarajan warned that exports too could be impacted if the US economy did not recover fast. The good news is the US debt crisis is unlikely to take a toll on the Indian economy.
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