GDP growth has languished below 6 per cent for three straight quarters, a far cry from the near-double-digit pace of expansion before the 2008 global financial downturn. Economic growth for the fiscal year ending in March is expected to be 5.7-5.9 percent, the slowest since 2002-03.
"We still have fundamental problems in the economy - high fiscal deficit, current account deficit, infrastructure bottlenecks and capital spending is not happening... Despite that with the reforms the government has announced over the last few months... and the Parliament functioned successfully for some time and some Bills were passed... I am reasonably positive that 2013 would be better than 2012," Mr Parekh told NDTV Profit on Thursday.
The government has launched important initiatives in September that included raising subsidised diesel prices and opening the retail and aviation sectors to foreign players.
Inflation, interest rates and oil prices are likely to come down next year, he added.
Mr Parekh said he was "puzzled" over the extended weakness in the rupee, which has depreciated nearly 2 per cent for the full year.
"Exports are slowing down so rupee has to become weak. Overall, global sentiments are weak and emerging currencies like ours will be weak," he said.
Strong fund infusion in 2012 has also not been able to support the rupee, Mr Parekh said. India has seen $23 billion in FII flows in 2012 against a net outflow in the previous year. NRI remittances have jumped up to $75 billion and revenue from IT/BPO sectors has gone up.
Huge amount of forex has come in. I know exports are slowing down, but it's the perception that the Reserve Bank will not intervene that has put pressure on the rupee, Mr Parekh said.