Economic growth to slip to 7% in 2011-12: Plan panel

Planning Commission today said the country's economic growth in the current fiscal will slip to 7% from 8.5% a year ago and may not touch 9% in the next financial year.

"Whether we can go back to 9% very next year is not likely, but I think we should be targetting in India, to do a lot better than 7%, that we will do this year," Planning Commission Deputy Chairman Montek Singh Ahluwalia said while addressing an automobile industry event here.

He echoed views about the economic growth as expressed by Prime Minister Manmohan Singh on Sunday while addressing 10th Pravasi Bharatiya Divas in Jaipur.

Singh had said, "the Indian economy is expected to grow by about 7% this financial year ending March 31."

The country had recorded an economic growth rate of 8.5% in 2010-11 and was initially estimated to grow by 9% this fiscal. The growth rate projection, however, was scaled down gradually by the Reserve Bank as well as the Finance Ministry.

The growth rate in the first half of the current fiscal slipped to 7.3% from 8.6% in the year-ago period.

Emphasising the need for improving business sentiments, Ahluwalia said, "We need to revive investment climate to achieve higher economic growth."

Stressing on the need for expediting the infrastructure development for high growth, he said, "there are big infrastructure projects which are stuck. Those need to be unstuck."

The government, he added, is trying to identify major investment constraints to boost economic growth.

On monetary policy, Ahluwalia said, "lower interest rates are likely only when fiscal deficit is down."

It is expected that the fiscal deficit will be more than the budget estimate of 4.6% of Gross Domestic Product (GDP) this fiscal.