New Delhi: The Planning Commission is sticking to its original 8.5% economic growth forecast for 2010-11 financial year, with principal advisor Pranab Sen indicating this is a more feasible scenario than the 9% expansion predicted by some experts.
“I think 8.5% GDP growth in 2010-11 looks more feasible,” he said when asked whether the country can achieve economic expansion of 9% with upward bias this fiscal.
Sen said the robust 8.9% growth registered in the first half of the 2010-11 fiscal came on the back of a low base in the previous year and as such, sustaining this trajectory in the second half of the the ongoing financial would be difficult.
“It is second half of the last fiscal when growth momentum came back. Sustaining 8.9% would be a problem, although agriculture (growth) is upside, downside is the base effect... I would not get carried away and say 9% (GDP growth this fiscal) right now,” he said.
However, chief economic advisor Kaushik Basu had a different opinion, asserting that it is possible for the country to record 9% growth this fiscal.
Driven by robust farm output and services sector growth in the second quarter, India’s gross domestic product (GDP) grew by 8.9% during the first half of the current fiscal.
The GDP growth rate during the period positions India as the second fastest growing large economy in the world after China, which registered a growth of 9.6% in the September quarter.
Commenting on strong growth of the farm sector, he said, “Agriculture looks good, but it looks good because of bad monsoon last two years. If you look at three-year average agriculture growth rate, it is 3%, you have restored momentum.”
When asked whether the government would maintain the status quo on short-term monetary measures introduced to drive growth, he said monetary measures have to be decided from time to time, adding that at the moment, the status quo was the right position.
Asked if the RBI would announce any monetary measures in its forthcoming review, he said, “I doubt.”
Earlier this month, the RBI hiked key short-term lending and borrowing rates by 25 basis points each with immediate effect to rein in inflation.
Accordingly, the short-term lending (repo) rate stands at 6.25% and the borrowing (reverse repo) rate at 5.25%.
When asked if the money collected through the 3G spectrum sale would improve the fiscal position, he said, “We don’t sell spectrum every year, so these are one of few things that does not really change fiscal position dramatically. For fiscal position, we need to look at taxes and expenditure.”