Growth to be 6.5% or more this fiscal and next: Montek

India is likely to grow at 6.5 per cent or above in the current fiscal and in 2009-10, Planning Commission Deputy Chairman Montek Singh Ahluwalia today said.

"We are likely to get a growth rate less than 7 per cent... Between 6.5 and 6.7 per cent in 2008-09," Ahluwalia today said at the CII convention here. His statement assumes significance in the light of IMF projections that peg GDP growth at a modest 5.1%.

Ahluwalia added that the growth performance is likely to be repeated in the next fiscal 2009-10.

The stimulus packages announced earlier will show their impact from the first quarter of the next financial year, he added.

He added that the situation is not bad and it's the negative view that is leading to a heightened perception of risk. Thus, the government allowed the fiscal deficit to go up very sharply, he said.

On a calendar year basis, 2009 is going to be significantly bad than 2008, Ahluwalia said.

"Both fiscal and monetary policy require tackling the risk perception ... (the) rural economy is not weaker in any sense. That part of economy is not going to be adversely affected," he added.

Giving a clearer picture on the fiscal deficit, Ahluwalia said it is expected to widen by 3.5-4 percentage points this fiscal as compared to the previous year.

"This government allowed the fiscal deficit to go up very sharply against (the projected) 3 per cent of GDP. This (the deficit) would be well in excess of 6 per cent," he said, adding the higher deficit is a deliberate step by the government in order to carry out more spending to revive the economy.

"India has had some fat years in the last three years, now a couple of years are going to be lean," Ahluwalia said.

In the global economic context, he said, "If policy is wrongly calibrated you can get (L-shaped) recession, it will turn (U-shaped) if calibrated well."

He said the current global crisis is probably the worst in 60 years.

However, going forward, people will feel uncertainty has reduced and recovery is expected to begin sometime around the second quarter of 2009-10, he said.