Indian economy will slightly perform better this year as the productivity level of capital may remain high, former governor of RBI C Rangarajan today said.
"Though the growth rate of economy will be somewhere around 7.5 per cent, the productivity of capital is less than investment growth and should catch up," Rangarajan told reporters on the sidelines of the 24th session of the India Art History Congress at Kumaraguru College of Technology here.
The rate of agriculture growth is expected to be lower this fiscal too, he said.
On raising FDI cap, Rangarajan said there could be 100 per cent FDI in certain sectors, but there should be restrictions in some cases, particularly Defence.
Listing out the positives, he said more foreign capital should not just add to finances, but contribute to use of newer technologies.
"I think as we move towards less and less controls and as
the fiscal system gets stabilised at a reasonable level...The opportunity or the scope for creation of black money will be less," Rangarajan said.
On the country's GDP growth, Rangarajan said the economy as a whole would do slightly better than last year.
"Perhaps the growth rate in the current fiscal ending March 31, 2016, will be around 7.5 per cent. That's my estimate," he said.
As for the country's exports continuing to fall for the 12th month in a row in November, he noted that India also benefited from lower imports.
"When you look at total value of exports, the decline is very strong. But if you exclude oil, the non-oil export is also showing a decline, but not severe a decline as the overall exports, because on the import side we are gained by the fall in the oil prices," Rangarajan pointed out.
"The export of oil products from India has also suffered because of fall in the value. Much depends upon how the world economy picks up. I would still think that the current account deficit will still be manageable.
"Export growth may come down or may be moderated, but at the same time we have the benefit of lower imports because the oil imports...The value of oil imports is coming down very fast because oil prices have gone below (USD) 50 (a barrel)," he said.
"But the non-oil exports will depend upon a large extent on how the world economy behaves," Rangarajan added.
