Manufacturing sector holds key to 6% GDP growth

Next fiscal to be better, says Rangarajan

The economy is likely to grow by close to 6 per cent this financial year on manufacturing picking up in January-March quarter as a result of recent government decisions, PMEAC Chairman C Rangarajan said on Saturday and expressed confidence better in the next fiscal.

“We really need to see that manufacturing sector needs to pick up and I believe that actions and decisions taken by the government recently have started showing a change in investment sentiment. Therefore, in the (current) three months -- January, February and March-- I believe manufacturing will pick up and we will get a growth rate close to 6 per cent this year," he said.

Rangarajan, who has also served as governor of the Reserve Bank of India, said: “I expect 2013-14 to be better than 2012-13 for several reasons, plus the change in investment sentiment. The full impact (of recent government decisions) will only be seen in the course of next year which can result in private investment activities picking up.”  He was speaking at the Chamber Day celebrations of Hindustan Chamber of Commerce.

The index of industrial production (IIP) data recently revealed that manufacturing sector grew a paltry 0.3 per cent in November 2012. The output  remained low at 1 per cent in April-November last year as against 4.2 per cent growth in the same period last fiscal.

Rangarajan's forecast on growth follows the RBI trimming its projection for 2012-13  to 5.5 per cent in its January 29 monetary policy review. 

On the current account deficit (CAD), the chief of the Prime Minister's Economic Advisory Council (PMEAC) said that CAD should remain almost unchanged. 

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