Economic Growth in FY'13 to Fall Below Potential: RBI

Mumbai: The Reserve Bank said economic growth in 2012-13 is likely to fall below the revised potential of 7.5 percent due to a host of global and domestic factors.

"Growth in 2012-13 is likely to remain below potential. Newer risks to growth have arisen from slowing global trade, domestic supply bottlenecks of industrial inputs, coal and electricity and less-than-satisfactory monsoons," RBI said in a report released on the eve of the first quarter review of monetary policy.

The apex bank's report on Macroeconomic and Monetary Developments further said the potential growth rate has moderated to 7.5 percent from 8 percent earlier.

"Outlook for growth looks weak and substantially affected by global headwinds, inflation and policy uncertainty," it said.

The central bank suggested some quick-fixes to the policymakers that will help revive the sagging growth pace.

"Removing constraints on FDI (foreign direct investment) and improving the investment climate by moving quickly to address bottlenecks in the infrastructure space are important," it said.

Quarterly growth dipped to a nine-year-low to 5.3 percent during the January-March period, while the same for FY12 came at 6.5 percent, lower than the 6.7 percent observed during the peak of the global credit crisis in 2008-09.

This had led to a rash of downgrades in estimates by multilateral agencies and analysts, with some pegging it as low as 5.3 percent.