Plan panel sees 6.3% growth

Plan panel sees 6.3% growth
Times of India, September 2, 2009, Page 24

NEW DELHI: Prime Minister Manmohan Singh has cautioned that despite a slight rise in growth, the road to recovery was a long haul, while the Planning Commission felt drought may pull down growth from 6.1% recorded during the first quarter even though 2009-10 may still end with a 6.3% expansion.

Addressing the plan panel on Tuesday, Singh said, ‘‘We have been through a difficult year because of the global economic downturn, which is only now coming to an end with a slow return to normalcy in the months that lie ahead. The country has also seen a poor monsoon.’’

Planning Commission deputy chairman Montek Singh Ahluwalia said, ‘‘The growth rate may turn worse in the current and next quarter because of the impact of drought.’’

UPA dispensation is concerned about the slow pace of economic recovery after the impact of the global downturn. However, anticipating a strong turnaround in the last quarter, Ahluwalia predicted GDP would expand to 6.3% in the current fiscal.

The plan panel’s presentation in the meeting, attended by FM Pranab Mukherjee, agriculture minister Sharad Pawar, power minister Sushilkumar Shinde and other key policymakers, expressed optimism about high growth path from the next fiscal.

The presentation said, ‘‘We project growth of 8% in 2010-11 and 9% in 2011-12. This is optimistic but not impossible. If we have normal monsoon in 2010-11, we can expect a strong rebound in agriculture next year.’’

The economy grew 6.1% in the first quarter, roughly in line with forecasts, but a poor monsoon threatens to erode growth later in the year even as it drives prices higher.

At the meeting which was called to deliberate on state of national economy and integrated energy policy, the PM also pointed out that rational energy policies were critical for rational responses to the threat of climate change.

‘‘This is a new compulsion. We need to assess whether we are on track in critical aspects of our energy policy. Energy is vital to our economic growth. This is an area where we are a deficit economy. We import over 70% of our petroleum energy needs and are also moving to a deficit position in coal,’ Singh said.

After UPA government was voted back, this was the first meeting of the full Planning Commission. It comes against the backdrop of the country facing one of the worst droughts in decades with 278 districts across 11 states declared drought-hit.

Reacting to plan panel’s note on inflation, deputy-chairman Ahluwalia said, ‘‘If drought is managed well and there is good rabi crop as well as fiscal consolidation, inflation may well be contained within the comfort zone.’’