Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan has expressed confidence that India will see "distinctly better" economic growth in the second half of the current financial year.
The economy grew by 4.4 per cent in the first (April-June) quarter of current financial year. In 2012-13, the GDP growth fell to a decade low of 5 per cent.
"The impact of the good monsoon will be only seen in the second half. Apart from increasing agricultural production, this will also increase the rural demand," Rangarajan said at a CII seminar on Financial Inclusion for Reviving Growth.
Besides, there has been improvement in the manufacturing sector and in the second half of the current fiscal the growth of this sector could be about 3 per cent, he added.
"Therefore, for the year (2013-14) as a whole, it will be about 1.5 per cent which will be consistent with an aggregate growth rate of the economy of a little over 5 per cent," Rangarajan added.
He also maintained PMEAC's growth projection of about 5.3 per cent which can be achieved with the present trend in the manufacturing.
PMEAC had initially projected growth target of 6.4 per cent for 2013-14 which was lowered to 5.3 per cent in September.
In reply to a question as to whether India is ready to cope with the financial stress that might arise due to the US fiscal tapering, Rangarajan said: "I think we must get ready for it because we don't know when it will happen. The good news is that the current account deficit is coming down. In fact the CAD should be much lower than what one had expected. If the CAD come down below 3 per cent of the GDP, the capital flows should be adequate to control the CAD."
Finance Minister P Chidambaram had in October said India will be able to contain CAD below $60 billion in 2013-14 as against an earlier estimate of $70 billion.