GDP in FY12 may moderate to 8-8.5%: Montek

Expressing concern over decline in economic expansion during the quarter ending March, the Plan panel today said Gross Domestic Product (GDP) growth rate during the current fiscal is likely to be around 8 to 8.5%.

"The real concern is that quarter-on-quarter growth rate for last quarter (of 2010-11) has come down an little bit," Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters here.

He was commenting on data released by the government today which showed the growth rate during the January-March 2011 quarter slowing down to 7.8%, mainly on account of moderation in growth of manufacturing and mining sectors.

The data further revealed that GDP growth rate was 9.4% in the last quarter of 2009-10 and 8.3% in the third quarter of 2010-11.

The annual growth in the 2010-11 works out to be 8.5%, marginally below the earlier projection of 8.6%, as per the data. However, it is better than the 8% economic growth achieved by the country in 2009-10.

"It is true that it (fourth quarter growth) is lower but aggregate GDP growth (for 2010-11) is lower by (only) 0.1% than the projected 8.6%," Ahluwalia added.

Asked about the likely economic growth this fiscal, Ahluwalia said it would be in the range of 8 to 8.5%.

"We have lowered the growth forecast for 2011-12. The RBI has said something. Finance Ministry has said that it should be 8.5%. I think somewhere between 8 to 8.5%," he said.

In its pre-Budget survey, the government had pegged economic growth for 2011-12 at 9%. However, the Reserve Bank, in its monetary policy released earlier this month, said that GDP growth during 2011-12 would be only around 8%.

"I think what is going to matter is creation of more investment friendly climate and whether the pace of investment in infrastructure picks up. There is a need for more Public- Private Partnership projects and promoting those should be our objective," Ahluwalia said.

The Plan panel chief also said that the coming months could see a moderation in the inflationary pressure.

"It (inflation) is a matter of concern all across the world. During the year you will see inflation down, but it would be a gradual, not sharp reduction," he said.

Headline inflation stood at 8.66% in April. RBI, in its policy, had said that inflationary pressure would persist in the near run and overall inflation would average 9% during the first half of the fiscal, before moderating to around 6% by March 2012.