Economy to grow at 8.2-8.5%, says Montek

Amidst the ongoing debate over economic slowdown in the country, Planning Commission Deputy Chairman Montek Singh Ahluwalia on Monday said a reasonable target for Indian economy would be between 8.2 per cent and 8.5 per cent in the current financial year.

“I do not think a slowdown is taking place. Last year, we ended with 8.6 per cent growth. Even if we grow at the reasonable rate between 8.2 per cent and 8.5 per cent, I will say it is a very good performance,” Ahluwalia told reporters after attending a meeting of the chief ministers and finance ministers of the western region on issues relating to the formulation of 12th Five-Year Plan.

Ahluwalia said the 8.2 per cent to 8.5 per cent growth is very good when globally several countries are expecting lower growth than 2010. Subsequently, India can look for increased growth rate. “Do not get too alarmed by what economists write or speak. It is true inflation is high not just in India but around the world, and it is a big problem. We need to bring it under control but it is taking a longer than originally thought,” he said.

Ahluwalia's statement comes in the backdrop of Reserve Bank of India's tight monetary policy and high inflation. It is also crucial when Prime Minister's Economic Advisory Council Chairman C Rangarajan recently said India's economic growth in 2011-12 is likely to be about 8.5 per cent, lower than the Budget estimates. Besides, the Organisation for Economic Cooperation & Development has projected the economy to expand 8.5 per cent.

On the last week’s rise in petroleum prices, Ahluwalia defended the government's move and said it had also provided duty reliefs. “Price rise always hurts. It will have some impact. Had this rise not been done, deficit would have surged that in turn would have led to growth in inflation. The last week's rise in price will directly impact petroleum prices but not other prices. I am not a forecaster or astrologer. The effect will be for next three to four months.”

Ahluwalia said India imports 85 per cent of petroleum products. “When the world prices rises and you expect no change in the domestic prices, then we are ending up weakening not only the oil sector but the economy as a whole,” he added.

He said there had been an overall view that in the last five years, economy grew by 8.2 per cent in real terms and majority of people benefitted. “But I do admit some really poor people need special protection,” he said.