But dismisses UPA-II’s sub-7% performance in 6-7 quarters as normal

Planning Commission Deputy Chairman Montek Singh Ahluwalia has said that given the investment practice in the country (of about 32 per cent of GDP), any government of the day must be able to deliver a growth rate of 7 to 7.5 per cent.

“Any government in India should be ruthlessly judged on whether it is aiming to get about 7-8 per cent growth over the next 10 years. A few quarters of low growth is more of an aberration,” he said at India Economic Outlook Conclave organised by the SME Chamber of India.

When asked if six-seven consecutive quarters of sub-seven per cent growth in the current tenure of UPA-II Government is more than just an aberration, Ahluwalia pointed out that a few quarters of “down-turn” is normal in any economic cycle.

The outgoing deputy chairman of the planning commission said that if the new government acts correctly, then it should be easy for the country to return to the high growth path.

“Whatever the new government you have, I would say that as it happens elsewhere… the new government will have a year or so of a honeymoon period where it will just do what needs to be done. I don’t think people will be objecting to that. After a year or so we will get back to the discussion mode.

“There is a good chance that if they do the right thing, we will see the economy returning back to a higher growth path,” he added.

Ahluwalia also said that small and medium enterprises (SME) growth in the country is linked to the overall well-being of the economy. “It is not possible to solve the problems of SMEs except in an environment of general economic growth,” he said.

He also added that the industry did not capitalise on the years of high economic growth.

“It is true that the industry has not performed up to expectations. During the years when the economy was growing at 8 per cent, the industry was growing at only 6 per cent. There is no reason why manufacturing should not grow at a double-digit growth. We need to find out why the industry did not do well,” he added.

(This article was published on May 10, 2014)
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