Montek expects 8% growth in two-three years

Planning panel deputy terms HSBC's projection at 5.2% for current fiscal as 'incorrect'

Expecting a better economic growth rate in the second half of current fiscal, Planning Commission Deputy Chairman Montek Singh Ahluwalia today said GDP expansion is likely to improve to 8% in the next two to three years from below 6% at the moment.

"India is growing just below 6% at the moment and the government hopes to take it to 8% over a two-to-three year period which is not an unreasonable expectation," he said in an interview to private news channel.

Terming HSBC's projection at 5.2% for the current fiscal as incorrect, Ahluwalia said the second half is likely to be better than the first half's.

HSBC has recently lowered India's growth forecast for 2012-13 to 5.2% from 5.7% projected earlier, and for the next fiscal to 6.2% from 6.9%.

"HSBC probably got it wrong...I do not expect a further deceleration of GDP growth. In the first half of the year, GDP growth was around 5.4%. My expectation is that in the second half of the year, when the data comes in GDP growth will be higher than 5.4%. HSBC forecast is excessively pessimistic," he said.

On likelihood of increase in diesel prices, he said, "I am not speculating on what government might do in the next week or two. That is something the ministry of petroleum has to decide... Some graduated adjustment is necessary but exactly when and by how much, is really left to the discretion of the Oil Ministry."

The 12th Plan document, he added, had made it clear that it was essential to align domestic fuel prices with global prices as the under-recovery on petroleum was very large.

As regards the widening Current Account Deficit (CAD), Ahluwalia said it should be brought down to about 3% in the next few years and 2% by 2016-17, the last year of the 12th Plan.

According to latest figures, CAD, which is difference between exports and imports after taking into account remittances and other payments, was 5.4% in July-September quarter of 2012-13.

The government, he hoped, would take steps to deal with the situation in the forthcoming budget as "it is not unwilling to take difficult decisions. The government has already taken several of them".