India's economy could expand by around 6 per cent in 2013, World Bank chief economist Kaushik Basu said today, attributing the current slowdown to global factors.
"It is very-very difficult time for the world... The World Bank's rough expectation is that in the calender year 2013, India is going to see growth rate of just short of 6 per cent," said Mr Basu at C D Deshmukh Memorial Lecture.
Officially, the World Bank is slated to release global growth projections on January 15.
Amid global slowdown impacting India, the government had lowered the country's economic growth for the 2012-13 fiscal year to 5.7-5.9 per cent from its earlier projection of 7.6 per cent. The gross domestic product (GDP) had expanded by 6.5 per cent in 2011-12, which was a nine-year low.
On India's current account deficit (CAD) which widened to record 5.4 per cent of GDP in the July-September quarter, Mr Basu said that though it is a cause of worry, there are market factors which will come into play to stabilise it.
"India has proper floating exchange rate, it (current account deficit) is not as worrying because there are automatic market stabiliser which will begin to kick in," he said.
Current account deficit, which represents the difference between exports and imports after considering cash remittances and payment, was $18.9 billion in the same period of a year ago and $16.4 billion in the first quarter (April-June).
A higher current account deficit has adverse impact on rupee value and affects foreign exchange reserves as well.
On high prices, Mr Basu said, "The government should try to bring inflation down to 4-5 per cent."
Before joining World Bank, Mr Basu had served as chief economic advisor to the Ministry of Finance.