New Delhi: Planning Commission Deputy Chairman Montek Singh Ahluwalia has said that economic growth may moderate to about 8%, or a tad lower to 7.9% in the current fiscal, even as he pointed out that inflation would not affect expansion in medium or long-term basis.
“Inflation is a short term challenge and would not affect growth rate on a medium to long term basis,” he said, adding, “Though this fiscal, we may see a slightly lower growth rate at about 8% or a little less than that, say around 7.9 % that is not bad,” he said, on the sidelines an India Gandhi National Open University (IGNOU) function.
“If properly handled, it (inflation) should not affect the average growth objective of 9%,” he noted.
The Deputy Chairman also said that the surging crude oil prices have pushed up inflation not only in India but also in other countries. Amid speculations that crude prices may further go up, Ahluwalia said speculations of crude oil prices would lead to nowhere.
“There is no point in speculating. Our job is to control inflation and I am confident that we will be able to do that effectively,” he said.
Inflation touched a 13-year high of 11.42% for the week ended 14 June. The RBI last week increased the short-term lending rate (repo) and the mandatory deposit that banks (cash reserve ratio) are required to park with the central bank by 50 basis points each to control inflation.
The move would suck out liquidity from the system, thereby pushing banks to increase their lending rates.