"I think it (growth) will happen. For the second half of the year, it will be distinctly better," Rangarajan told reporters on the sidelines of an industry event in New Delhi.

"The impact of the good monsoon will be only seen in the second half. Apart from increasing agricultural production, this will also increase the rural demand," he said at a CII seminar on Financial Inclusion for Reviving Growth.

Besides, Rangarajan said, there has been improvement in the manufacturing sector and in the second half of the current fiscal the growth of this sector could be about 3 percent.

"As far as manufacturing is concerned, we have seen some improvement... Going ahead, in the second half of the year, we think that the manufacturing growth rate will be about 3 percent," he said.

"Therefore, for the year (2013-14) as a whole, it will be about 1.5 percent which will be consistent with an aggregate growth rate of the economy of a little over 5 percent," he added.

The economy grew by 4.4 percent in the first (April- June) quarter of current fiscal. In 2012-13, the GDP growth fell to a decade low of 5 percent.

Rangarajan said the impact of various measures that the government has taken in the recent past will be seen in the second half only.

He also maintained PMEAC's growth projection of about 5.3 percent which can be achieved with the present trend in the manufacturing.

The Prime Minister's Economic Advisory Council had initially projected growth target of 6.4 percent for 2013-14 which was lowered to 5.3 percent in September.

In reply to a question as to whether India is ready to cope with the financial stress that might arise due to the US fiscal tapering, Rangarajan said: "I think we must get ready for it because we don't know when it will happen. The good news is that the current account deficit is coming down.”

"In fact the CAD should be much lower than what one had expected. If the CAD come down below 3 percent of the GDP, the capital flows should be adequate to control the CAD."

Finance Minister P Chidambaram said last month that India will be able to contain CAD below USD 60 billion in 2013-14 as against an earlier estimate of USD 70 billion.


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