Drought will not affect growth target of 6.3%, food prices will stabilise: Montek

The drought would not pull down India’s growth rate below the target the government set at 6.3 per cent and the overall impact would not be as bad as expected earlier, Planning Commission Deputy Chairman Montek Singh Ahluwalia said.

“I am eliminating the downside possibility of the forecast made by Planning Commission, as the impact of drought would not be as bad as it was expected earlier,” he told reporters on the sidelines of an event organised by the United Nations. The Planning Commission had projected a growth rate of 6.3 per cent for the current financial year in the full plan panel meet held last month.

Moreover, he said the food price inflation would ease in the coming months due to reduction in speculative activities. Bleak agricultural forecast due to weak monsoons had led to speculation. “These speculative activities have led to a surge in food prices, but they will soon stabilise. I hope inflation will ease and not exceed the RBI estimate of 5 per cent (point on point basis) by March 2010. The priority now is to support economic recovery rather than bring prices down,” he added.

The headline inflation rate, as measured by the Wholesale Price Index (WPI) stood at 0.37 per cent for the week ended September 12, however food prices have surged 14.8 per cent since the onset of the current financial year.