Inflation to moderate by September, economy on track for 9 percent growth: Ahluwalia
The Deputy Chairman, Planning Commission, Dr. Montek Singh Ahluwalia has allayed fears that the prevailing steep annual inflation rate could derail India's economic growth, by saying that India could still attain an average 9 percent annual growth in the five-year period ending 2011-12.
According to Montek Singh Ahluwalia, in spite of inflation hitting a 44-month high, the economic growth factors were strong and higher investment in infrastructure and improvement in power situation could play crucial roles to sustaining higher growth.
"I am very confident that India is at a position when it will get a higher growth rate in the days ahead. Even if in the current year, the economy grows at 8 percent, I still think the average growth of 9 percent for the Eleventh Plan period (2007-08 to 2011-12) could be attained. The target (of nine percent growth in the Eleventh Plan) is not unreasonable," he said.
However, Ahluwalia warned of a slowdown for 2008-09. "We should be ready to accept the growth at the lower end of range," he said, noting that various organizations have estimated a growth rate of 8-9.5 percent for 2008-09.
India's premier economic research institution, National Council for Applied Economic Research (NCAER) estimated the nation's economy would grow at 8.5-8.9 percent during the current fiscal year (2008-09) while the Mumbai-based Center for Monitoring the Indian Economy (CMIE) has projected the country's gross domestic product (GDP) to grow by 9.5 percent during the same period.
The Asian Development Bank expects India to grow at 8 percent this year, slowing from 8.7 percent in 2007.
Ahluwalia also agrees with the view of India's Prime Minister Dr. Manmohan Singh who said that he expected a moderation in the prices over the next few weeks.
"There is always a rise in prices between May and September. Even in the normal years prices do rise between May and September," Singh had said, adding, "We have taken adequate measures. We have taken effective steps. We are hopeful of moderation over the next few weeks."
"We need to be patient. In 3-4 months, inflation will come down significantly," Ahluwalia said.
Earlier, Finance Minister P. Chidambaram had suggested that to tame inflation, India could sacrifice a little growth.
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