Millennium Post

Achieving 7.5% growth is tough task: Montek

Falling rupee and high inflation would make it difficult for India to achieve 7.5 per cent economic growth during the current financial year, Planning Commission of India deputy chairman Montek Singh Ahluwalia said.

'The finance ministry has said they are hoping for a 7.5 per cent growth this year. That is going to be tough but not impossible,' Ahluwalia said.

He said while the last quarter did not show robustness, it remains to be seen how growth in the first quarter of the current fiscal will fare.

'It is going to be a slow transition,' he said, adding that in India 'we need to get out of a what looks like a decelerating growth phase ... and move to the growth path.'

Economic worries over the past few months like rupee depreciation, high inflation and current account deficit are not helping India, which has been trying to get back on the pre-global crisis growth rates of 8-9 per cent.

The rupee has depreciated by 11 per cent against dollar since March. At the same time, inflation in April rose to 7.23 per cent against 6.89 per cent a month ago.

The global financial crisis of 2008 had pulled down India's growth rate to 6.7 per cent in 2008-09. India has projected a growth rate of 7.6 per cent in 2012-13, up from 6.9 per cent recorded in the previous fiscal.

Ahluwalia said, 'I would certainly hope so. Certainly all the advice that we would be giving [to the government] is that India has tremendous opportunity to look good and to attract investment in a world which is very uncertain and we should not miss that opportunity.' He underlined need for restoration of fiscal credibility, action on the under-priced petroleum products and taking care of implementation bottlenecks in infrastructure projects as being measures that should be very high on the Indian government's agenda.

'Even if a little block is removed, it will create a revival of confidence that the country is on the right track,' he added.

Ahluwalia said the view in the Planning Commission on fuel subsidies is very clear that 'fuel prices just have to be adjusted. It is obvious from a technical and economic point of view. In practice, political realities also have to be taken into account and governments very often have to decide when they want to do it.
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