High growth unlikely till FY12: CEA

High growth unlikely till FY12: CEA
Business Standard, October 26, 2009, Page 6

Hit by the global financial crisis, the Indian economy is unlikely to fully return to the high growth path till 2011-12, Chief Economic Advisor Arvind Virmani says.

But for the impact of global financial meltdown, Indian economy has entered the high growth phase, in which the underlying medium-term rate of GDP growth is about 8.75 per cent (plus or minus 0.25 per cent), says the recently released book, The Sudoku of India's Growth, penned by Virmani.

However, global crisis is expected to pull down the growth below this trend, says the book, adding that the economy is likely to close the gap with the high growth phase in 2010-11.

"Given the unprecedented financial meltdown in the US economy and the depression in the rich/advanced economies, the actual growth rate is expected to be well below this trend...and will partially, but significantly, close the gap in 2010-11," Virmani says.

"The Indian economy is unlikely to recover fully from this and return to its high growth journey till 2011-12," says the book.

Virmani says India has the potential for high growth, provided it continues with its open door policy and moves up gradually along the path of liberalisation, privatisation and globalisation.