New Delhi: India’s economy is expected to grow 7.5-8% over the next few years if it is “business as usual”, Montek Singh Ahluwalia, deputy chairman of the Planning Commission, told Reuters on Friday.
His forecast is lower than the government’s target of around nine% over the next few years, key for India to lift millions out of poverty.
“If we just carry on doing a little bit of progress at the pace we have managed at the last few years (we have to grow at) somewhere between 7.5 and 8% depending on the global situation,” Ahluwalia told Reuters shortly ahead of an interest rate decision by India’s central bank.
“I mean if the global situation is good, eight%, otherwise we could slip to 7.5%. We have said in the 12th (government) growth plan that we should aim at nine% and that additional one-plus% has to achieved through more than business and usual methods.”
He also said the economy is expected to grow 8% with a downside risk in the current fiscal year to end-March 2012. He also said he still expected inflation to slow to seven% by March next year.
India’s domestic demand driven economy grew 7.7% in the April-June period, its weakest pace in six quarters, but outperformed even gloomier predictions.
Many private economists have cut India’s growth outlook citing policy paralysis, high inflation and rising interest rates.
On whether the Reserve Bank of India should raise interest rates he declined to comment except to provide a general view, similar to the finance ministry’s.
“There is not a case in my view that there is an overwhelming case to raise interest rates, equally it is a question of whether you care more about being safe than sorry and therefore that is the margin of error,” Ahluwalia said.