India may slip on 5.1% fiscal deficit target: Louis Kuijs

NEW DELHI: Stating that the prospects of achieving a 7% plus GDP growth rate have weakened, Louis Kuijs, Project Director, FUNG Institute told ET Now that India will most probably grow at a 6.7-7% rate in FY13.

In an interview with ET Now, Kuijs said that India may face a slippage in its projected 5.1% fiscal deficit target for the financial year on account of high subsidy bills. The subsidy bills he feels would overshoot the estimated figures owing to high global oil prices.

The Finance Minister Pranab Mukherjee in his budget speech had announced a projected GDP growth rate of 7.6% for FY13.

With inflation not fully under control, Kuijs said that there is not much room for the Reserve Bank of India ( RBI) to ease in order to boost economic growth. He expressed concern over the country's high current account deficit and conveyed that with a tough macro situation the rupee may face challenging times in the year ahead.

With rising oil prices posing a risk to global economy, Kuijs told ET Now that the supply driven prices may choke growth.

He expressed faith in the US economic growth and opined that with the American economy holding up reasonably well the chances of a QE3 were fast diminishing. However, he emphasised that Europe will continue to remain a weak spot in the global economy.

Asked about the recent robust China PMI data, Kuijs felt the need to revise upwards, China's growth projection targets. Even though the Chinese economy has been slowing for the last year or so, Kuijs felt that he did not see it moving into a dangerous territory.

China's official Purchasing Managers' Index (PMI), which covers large factories, jumped to an 11-month high of 53.1 in March, beating forecasts.