India can sustain 3% current account deficit: Montek

India can sustain a 3 per cent current account deficit. The same can be financed through a steady flow of foreign direct and portfolio investments, said Dr Montek Singh Ahluwalia, Deputy Chairman, Planning Commission.

In a brief interaction with the press after the convocation ceremony at the Tata Institute of Social Sciences, Dr Ahluwalia said India is a high-growth economy and has the potential to grow at 9 per cent.

While admitting that the deregulation of diesel prices is a politically sensitive issue, he said energy prices should be aligned with economic realities otherwise energy efficiency cannot be attained.

He said there is a possibility of generating renewable energy but it would be more costly than conventional energy. When conventional energy itself was under-priced, there is little attractiveness to venture into renewable energy.

Responding to a specific query, Dr Ahluwalia also said in his personal opinion FDI in retail and aviation is good.

Growth, structural change go together

Addressing students and faculty at the institute, Dr Ahluwalia said growth and structural change go hand-in-hand. Structural change by its very nature is disruptive.

“With growth, employment will shrink in certain sectors such as agriculture. People will move to other sectors and there will be disruptions,” he explained. He recalled the Bollywood flick Peepli Live to illustrate his viewpoint.

Dr Ahluwalia, however, said he did not think that all those who moved from agriculture to other sectors ended up as construction labourers as depicted in the movie.

“We need to manage change better,” Dr Ahluwalia said. “There is a need to identify areas where new pressures are going to emerge. Areas such as energy, water, pace of urbanisation and how land acquisition (compensation and rehabilitation) is handled are the big issues that need focus.”

>satyanarayan.iyer@thehindu.co.in

COMMENT NOW