India PM adviser says economy bottomed out, sees 6.4 percent growth

NEW DELHI Tue Apr 23, 2013 3:54am EDT

A labourer carries a sack of cement past other labourers against a backdrop of the central Mumbai financial district February 7, 2013. REUTERS/Vivek Prakash

A labourer carries a sack of cement past other labourers against a backdrop of the central Mumbai financial district February 7, 2013.

Credit: Reuters/Vivek Prakash

NEW DELHI (Reuters) - India's worst economic slowdown in a decade has bottomed out and growth is expected to pick up to 6.4 percent in the current fiscal year, a top economic adviser to the country's prime minister said on Tuesday.

Adviser C. Rangarajan was releasing a report from the Prime Minister's Economic Advisory Council, which he heads, on the state of the economy in 2012/13.

"I believe we have reached the bottom, the economy will now continue to grow at a faster rate," Rangarajan told reporters.

"The very high level of investment rate that we have even now gives us the hope that if we take action for speedy implementation of projects we can achieve the higher rate of growth quickly even in the short term," he said.

Capital investment growth in Asia's third-largest economy has slowed down to at least an eight-year low as regulatory hurdles have stalled more than 7 trillion Indian rupees ($129.19 billion) big infrastructure projects, leaving investors wary and frustrated.

Prime Minister Manmohan Singh has set up a panel known as the cabinet committee on investment (CCI) to expedite regulatory clearances for major projects. On Monday, the panel cleared several energy and power projects worth billion of dollars.

The council said the government needs to do more in the coming months to facilitate new investments, adding speedy execution of projects coupled with normal summer rains will usher in a broad-based economic recovery.

"We have also indicated that there are several actions that need to be taken in order to ensure that we achieve this higher rate of growth," Rangarajan said.

Gross domestic product probably increased 5 percent in 2012/13, the slowest pace since 2002/2003.

The panel said it expects the full-year current account deficit, seen as the main worry for the economy, to narrow to 4.7 percent in the current financial year from 5.1 percent last year, helped by higher exports and lower gold imports.

It forecast headline inflation of 6 percent in the current financial year, allowing room for the central bank to persist with monetary easing. Wholesale price-based inflation, India's main inflation indicator, slowed to 5.96 percent in March, its lowest level since November 2009.

($1 = 54.1850 Indian rupees)

(Reporting by Manoj Kumar; writing by Rajesh Kumar Singh; Editing by Sanjeev Miglani)

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