"Growth outlook remains weak as factors that slowed down growth in the previous year persist and show no signs of getting resolved. The government in August 2012 promised to take several steps to address macro-economic weakness. As these steps materialise, growth could gradually start to improve later this year and trend growth could be restored next year,: the Central Bank has stated in its annual report.
Newer uncertainties for growth have emerged from unsatisfactory monsoon so far, which is likely to result in contraction in foodgrains output in 2012-13, the RBI has noted.
"In absence of signs of global conditions improving, the burden of adjustment would have to be borne by domestic policies. Structural impediments impacting business confidence needs to be addressed immediately, especially in mining and infrastructure sector. Fast-tracking of infrastructure projects will help boost investment.
With limited fiscal and monetary space available to provide a direct stimulus, an expenditure-switching policy is needed that reduces revenue spending by cutting subsidies and using the resources so released to step up public capital expenditures. This would provide some space for monetary policy, but lower interest rates alone are unlikely to jumpstart investment cycle," the annual report states.