"The Economy will grow at 5.3 per cent in 2013-14," Prime Minister's Economic Advisory Council (PMEAC) Chairman Rangarajan said while releasing the Economic Outlook for 2013-14. The PMEAC had in April projected 6.4 per cent growth for Indian economy for current financial year. The GDP grew by 5 per cent in 2012-13.

The Advisory Council also said that containing the fiscal deficit to the targetted 4.8% would be a challenge.

The PMEAC panel stated that the Reserve Bank of India (RBI) must maintain its current monetary stance until the rupee stabilises. The rupee had plunged to a record low of 68.81 to the dollar earlier this month.

Referring to the external sector, Dr. Rangarajan expressed hope that the current account deficit (CAD) in 2013-14 will come down to USD 70 billion from USD 88.2 billion a year ago.

As regards rupee, he hoped "at the current level (it) is well corrected. Stability is returning to the foreign exchange market. As capital flows return and as CAD begins to fall, this tendency will strengthen".

The comments particularly regarding fiscal deficit and monetary stance did not go down well with the markets, which reacted suddenly. The Sensex and the Nifty which were trading in the green suddenly dropped only to recover later on a bout of short covering.

GoodReturns.in with inputs from PTI