PM to be briefed on economy on July 23

Prime Minister Manmohan Singh will be briefed on the state of the economy and the growth outlook by his economic advisory council on Friday.

Chairman of the Prime Minister's Economic Advisory Council C Rangarajan is expected to brief the Prime Minister about the GDP projections and the challenges before the economy, notably high inflation, ahead of the monetary policy review by the Reserve Bank scheduled for Tuesday next.

"We will submit the economic outlook for 2010-11 (to the Prime Minister) on Friday," Rangarajan said on Wednesday.

The PMEAC in its February report had projected an 8.2 per cent economic growth for the current fiscal, while the budget had projected 8.5 per cent GDP growth for this fiscal.

In the meantime, different agencies, like the International Monetary Fund, have projected much higher growth numbers for 2010.

The fund last week had projected a full 9.5 per cent GDP growth this calender year.

However, the key challenge before the government and the central bank is to tame both the core inflation which was ruling at 10.55 per cent in June and food inflation at 12.81 per cent in the second week of July.

The RBI is expected to announce a second hike in its short term interest rates in less than a month. "They (RBI) may raise policy rates by another 25 basis points. Inflation continues to be the biggest worry," PMEAC member Govinda Rao said.

Though inflation remains a big worry for the government, widespread rains have improved the prospects of prices coming down, particularly of the food items.

On Tuesday Cabinet Secretary KM Chandrasekhar had said inflation was likely to drop to 5-6 per cent by December-end and the economic growth would accelerate to 8.5 per cent during the current fiscal.