Montek sees GDP growth close to 6% this fiscal

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Monsoon deficit could be a drag

Montek Singh Ahluwalia
Montek Singh Ahluwalia

Brace up for lower GDP growth of close to six per cent this fiscal as the deficient monsoon could pull down overall economic growth, Planning Commission Deputy Chairman Montek Singh Ahluwalia said here on Friday.

In 2011-12, the economy grew at 6.5 per cent.

Clearly, the Plan panel deputy does not seem to share the optimism of the Reserve Bank of India and the Prime Minister’s Economic Advisory Council (PMEAC) on growth.

While RBI has projected economic growth of 6.5 per cent, the PMEAC Chairman C. Rangarajan said he expected it to be higher than 6.5 per cent.

“If we factor in that (deficient monsoon)…agriculture would not be strong ... (growth) would be closer to six per cent. I don’t think we have sufficiently strong industrial turnaround yet,” Ahluwalia told reporters here.

India is grappling with its first drought in three years, though it is not a country-wide situation.

He said that annual average growth could be around 8.2 per cent in the 12 {+t} {+h} Plan period (2012-17), lower than the earlier estimate of nine per cent in the Approach Paper to Plan.

“The growth rate in agriculture will be lower and that means that certain amount of income and employment stress in rural areas will have to be countered.

“In that perspective, the existence of the rural job scheme provides a kind of automatic stabiliser. If people need work because of the drought, they will get work through MNREGA,” he said, and added that no special incentives were needed to tide over the drought-like situation.

(This article was published in the Business Line print edition dated August 4, 2012)
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