Disappointing performance of the economy in this fiscal should be a "wake-up call" for the government, the Economic Survey said, but it expressed the hope that growth rate would rebound to 7.6 per cent in 2012-13 on the back of moderating inflation and low interest rates.
The Survey made a case for fiscal consolidation, tax reforms, opening of the multi-brand retail to global chains, freeing of diesel prices and stressed on honesty quotient,too.
"The growth rate of real GDP (is expected) to pick up to 7.6 per cent (plus or minus 0.25 per cent) in 2012-13 and faster beyond that," the Economic Survey 2011-12 said. It also pointed out that economic expansion in the current fiscal will moderate to a three-year low of 6.9 per cent.
Though the government's fiscal deficit is likely to significantly go off the target of 4.6 per cent of GDP this fiscal, the Survey expects it to narrow down to 4.1 per cent in 2012-13 on the back of pick-up in economic activities.
After tabling the pre-Budget document in Parliament, Finance Minister Pranab Mukherjee said, "It charts economic development and challenges faced during the fiscal year. It is a vital input for the preparation of the Budget."
The Survey, which projects India as the world's 4th largest economy, called for ruthless crackdown on corruption. Scandals are causing "slowdown in decision making and holding up economic reforms", it said.
Referring to RBI's monetary policy, high inflation and slowing investment and industrial activity, the Survey said, "There is room and need to be innovative in terms of policy; the slowing of economy is a wake-up call in that respect".
Talking to reporters, Chief Economic Adviser Kaushik Basu, the main author of the Survey, said growth in the manufacturing and agriculture sectors are likely to be key drivers in the next fiscal.
"There could be one more year of a slight slowing down of investment and saving rates. We expect ... Rates to pick up handsomely after that," he added.
While agricultural sector growth is likely to pick up in 2012-13, the Survey called for comprehensive efforts to achieve the targeted farm growth and suggested regular import of food items to check inflation, which remained near double digit during most part of the current fiscal.
It also called upon the government for specific steps like resolving land availability issues to increase the contribution of the manufacturing sector in the GDP.
Industrial growth, it said, is likely to rebound next fiscal on moderation in inflation and easing commodity prices.
Pitching for reforms in the pension sector, it said policy change in this regard will lead to long term savings and will also create a sustainable social security system.
The Parliamentary Standing Committee on Finance has given its recommendations on the a bill on pension sector and the draft legislation has also got the Cabinet nod. It could be taken up for debate during the ongoing budget session.
On capital market, the survey said the volatility in the domestic stock market is likely to persist till the European debt turmoil is resolved.
It said that a prolonged debt crisis in Greece has begun spreading to India and the continuing volatility in global financial markets could make it more difficult and costlier for the Indian banks and corporates to get foreign funds
The survey pitched for more aggressive steps to stem rupee volatility, which has depreciated sharply against the dollar in the past six months, to boost investor confidence.
"The rupee has experienced high volatility in the last few years. Such volatility impairs investor confidence," the survey said.
Further, it cautioned that market economy cannot function if people are totally self-serving and called upon political leaders and policymakers to become role models of honesty and integrity.
Commenting on the survey, the India Inc called for implementation of economic reforms and fiscal consolidation.
© Copyright PTI. All rights reserved. Republication or redistribution of any PTI content, including by framing or similar means, is expressly prohibited without their prior written consent.