Planning Commission sees growth rebounding to 8% next fiscal

Planning Commission sees growth rebounding to 8% next fiscal
The Financial Express, October 23, 2009, Page 1

fe Bureaus, New Delhi

The Planning Commission expects the economy to stage a full recovery by next fiscal and register a growth of 8%. It also expects last year’s final GDP number to be a tad higher than the revised estimate of 6.7%.

“GDP growth in the last fiscal will be revised upwards to 6.9%,” Planning Commission member Saumitra Chaudhuri said on Thursday. The upward revision is likely because of a better-than-estimated performance by the manufacturing sector, he explained.

The Planning Commission paints a rather bright picture for the next couple of years, “In 2010-11, we expect GDP could register a growth of close to 8%, while in 2011-12 it could grow at 8-8.5%,” Chaudhuri said at the India Forecasting Forum.

The forward-looking estimates are far more optimistic than the panel’s projections for the current fiscal. The Planning Commission expects GDP to grow at 6.3% in 2009-10, a shade lower than the 6.5% projected by the Prime Minister’s Economic Advisory Council (EAC).

“If the monsoon had been normal, we would have got 7%-plus GDP growth this year. The monsoon has essentially taken half a percentage point off growth,” explained Chaudhuri, who is also a member of the EAC.

“We expect that if overall global conditions are unfavourable, the Indian economy could grow at 7%. If, on the other hand, global conditions are favourable, growth could be close to 9%.” The Plan panel hopes that private corporate investment will pick up in 2010-11.

Significantly, Chaudhuri played down the role of disinvestment proceeds in bridging the fiscal deficit. “Disinvestment can only play a small role in the dynamics of the fiscal deficit. You can’t go for asset sales to improve your balance sheet,” he postulated, adding, “The basic correction in the fiscal deficit has to come from revenue and expenditure management, and not from disinvestment.”