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Dr C. Rangarajan, Chairman of the Prime Minister's Economic Advisory Council, on Tuesday sought to allay fears that a possible slowdown in Indian software exports due to the Euro zone debt crisis and economic woes in the US would affect India's GDP growth.
“India's exports of IT services will be affected, but not to a significant extent. I do not think this would have any direct impact on our GDP,” he told media persons on the sidelines of a function here.
He was, in fact, confident that India's GDP growth would be close to eight per cent this fiscal, despite uncertainties in global economy.
“I see a GDP growth of between 8 and 9 per cent for the next five years,” he pointed out.
In 2009-10, the US accounted for almost 61 per cent of India's total software exports, while European countries followed with 26.5 per cent.
Dr Rangarajan also did not expect that US would “slip into a recession”, although the growth rate could be slower.
Inflation trend
On inflation, he said it could remain on the higher side for the next three to four months, but could cool down to the seven per cent level towards March 2012. “From then on, inflation could further ease,” he said.
He, however, cautioned that pushing growth to more than nine per cent could fuel inflation.
“We have to ensure that we do not push growth beyond nine per cent, which will result in the economy being subjected to higher inflation,” he pointed out.
Fiscal deficit
On fiscal deficit, he said maintaining it at the targeted 4.6 per cent level “is not going to be an easy task.” Expenditure constraints, primarily the oil subsidy bill, will remain and “some action is required (in this regard),” he added.
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