The Economic Advisory Council to the Prime Minister has released the 'Economic Outlook 2010-11' document under the chairmanship of Dr. C. Rangarajan. The report estimates that the country's economy will grow at 8.5% in 2010-2011, while growth rate would increase to 9% in 2011-2012, with industry and services pegged to grow at 10.3% and 9.8% respectively.
Although it sees a slow recovery in the global economic & financial situation, the chief growth engines for India would be its rising domestic savings & investments. With an expected investment rate at over 37%, capital flows would be readily absorbed by financing needs of the high growth of the Indian economy.
The document estimates that the country's current account deficit shall close at 2.7% of GDP in 2010-11 and 2.9% of GDP in 2011-12. Projected inflation rates would come down to around 6.5% by March 2011, from a current base of 10%.
It identifies that controlling high inflation rate will be essential for sustainable growth in the medium term. With a monetary policy to complete the process of exit from the expansionary fiscal policy and operate with bias toward tightening credit & liquidity, the document targets a decline in revenue deficit as a ratio of GDP, from 6.3% in 2009-10 to 4.6% in 2010-11.