Weak monsoon likely to dent GDP: Montek

Weak monsoon likely to dent GDP: Montek
The Financial Express, August 19, 2009, Page 2

fe Bureaus, New Delhi

Planning Commission deputy chairman Montek Singh Ahluwalia on Tuesday said India’s growth projection could come down due to poor monsoon, but inflationary pressures would be controlled as adequate food stock is at disposal.

“The existence of drought by itself can lead to some shaving down of the growth projections,” he told reporters on the sidelines of the conference on ‘Key Inputs for Accelerated Development of Indian Power Sector for 12th Plan and Beyond’ here. However, “we have more than enough food stocks to counter inflationary pressures,” he added.

“The negative impact will not be on the country as a whole, but in some affected parts. No doubt that the (farm) output of some states will fall and there will be some distress,” Ahluwalia said.

In case of decline in agriculture produce “one-fifth of that percentage is knocked off from the projected GDP (gross domestic production) growth”, he said giving his projection on growth due to poor rains this year. However, Ahluwalia tried to allay fears by saying that the impact is limited to kharif crop, which is produced during the summer season, and the rabi crop (winter crop) would not be affected.

Agriculture contributes about 18% of country’s GDP and hence is key to the economic growth. Also, it provides jobs to more than two-third of the country’s 1.1 billion population. Out of more than 600 districts of the country, about 177 districts have been declared drought hit till now.

Experts have already projected a lower growth during the fiscal in the aftermath of deficit rain. As per Prime Minister’s Economic Advisory Council’s chairman C Rangarajan, the economic growth will dampen to 6-6.5%, while Planning Commission member Abhijit Sen said the economy would expand at a slower 5-6%. The economic expansion had come down to 6.7% during 2008-09, against 9% in the previous year.