Montek admits India can’t grow beyond 6% this year
4 Aug 2012 6:50 AM IST
Deficient monsoon is likely to pull down the economic growth in the current fiscal to about six per cent, from 6.5 per cent a year ago, the Planning Commission said on Friday.
'If we factor in that agriculture which would not be strong ... [growth] would be closer to 6 per cent. I don't think we have sufficiently strong industrial turn around yet,' the Planning Commission deputy chairperson Montek Singh Ahluwalia said.
In case of the 12th Five-Year Plan (2012-17), he said the annual average economic growth could be around 8.2 per cent as against the earlier estimate of nine per cent envisaged in the approach paper to the policy document.
Earlier, the Reserve Bank of India had lowered the growth projection for 2012-13 to 6.5 per cent from 7.3 per cent in the wake of deficient monsoon and global economic problems.
On whether special schemes were needed to tide over the drought-like situation, Ahluwalia said, 'I don't think you need an incentive. These are all issues that state governments have to tackle. They are usually very keen to take corrective measures.'
He further said that the rural employment guarantee scheme can deal with the problem of unemployment in rural areas. '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 MNREGA scheme provides a kind of automatic stabiliser. If people need work because of drought, they will get work through MNREGA,' Ahluwalia said.
On the impact of drought on price situation, he said, 'It is true that inflation has been a problem. It has come down from the double digits, but virtually all the government forecast say that it will remain at around seven per cent for some time, and that is not good enough.'
He further said that inflation is under control if it is between five to six per cent, but if 'inflation is above that … [level], it is a matter of concern.'
The Wholesale Price Index-based inflation in June was 7.25 per cent, while at the retail level it was at an alarming 10.02 per cent.
'If we factor in that agriculture which would not be strong ... [growth] would be closer to 6 per cent. I don't think we have sufficiently strong industrial turn around yet,' the Planning Commission deputy chairperson Montek Singh Ahluwalia said.
In case of the 12th Five-Year Plan (2012-17), he said the annual average economic growth could be around 8.2 per cent as against the earlier estimate of nine per cent envisaged in the approach paper to the policy document.
Earlier, the Reserve Bank of India had lowered the growth projection for 2012-13 to 6.5 per cent from 7.3 per cent in the wake of deficient monsoon and global economic problems.
On whether special schemes were needed to tide over the drought-like situation, Ahluwalia said, 'I don't think you need an incentive. These are all issues that state governments have to tackle. They are usually very keen to take corrective measures.'
He further said that the rural employment guarantee scheme can deal with the problem of unemployment in rural areas. '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 MNREGA scheme provides a kind of automatic stabiliser. If people need work because of drought, they will get work through MNREGA,' Ahluwalia said.
On the impact of drought on price situation, he said, 'It is true that inflation has been a problem. It has come down from the double digits, but virtually all the government forecast say that it will remain at around seven per cent for some time, and that is not good enough.'
He further said that inflation is under control if it is between five to six per cent, but if 'inflation is above that … [level], it is a matter of concern.'
The Wholesale Price Index-based inflation in June was 7.25 per cent, while at the retail level it was at an alarming 10.02 per cent.
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