New Delhi, Jul 6: Maintaining that the world economy was going through an ''exceptionally'' difficult phase, Planning Commission Deputy Chairman Montek Singh Ahluwalia said the Indian economy would clock a slower growth rate of 8 per cent in the current fiscal even though the medium and long term prospects were bright.
The Plan Panel Deputy Chief said fiscal 2008-09 by all accounts was a bad year for the world economy and India's growth rate would be impacted adversely. It is for this reason that economic growth may moderate to about 8 per cent, instead of the targetted 8.5 per cent in fiscal FY08.
Asked whether the political storm over high inflation was misfounded as the actors did not understand that it was largely a result of abetment by external factors, Dr Ahluwalia said ''I am not saying we should not be concerned about inflation and how to moderate it. I am only saying that external factors have contributed to India's inflation rate.'' ''If in a year the world economy is going through its most difficult phase, then I think that Indian economy registering eight per cent growth is not a bad deal,'' Dr Ahluwalia told newspersons here.
He was hopeful that the slow down in the world economy would bottom out next year and the India economy would stand to benefit from it.
Dr Ahluwala said all countries of the world have been impacted by the global slow down, India being no exception. The worst effect has come on developig countries.
Dr Ahluwalia said India infact was not much affected unlike some other countries and felt that the double digit inflation was mostly a result of external factors, including the soaring gobal crude oil prices.
The economist said the measures taken by the government and RBI would take some time to bring results on the ground. He, however, did not indicate the time frame in which this will happen.
Dr Ahluwalia, however, said inflation would not affect expansion of output in the medium or long-term basis.
He said the world was betting on India for this very reason.
Dr Ahluwaia, however, said controlling inflation was a short term challenge and would not affect growth rate on a medium to long term basis.
Earlier addressing a meeting of the Indian Institute of Chartered Accountants of India (ICAI) here, Dr Ahluwalia asked the accountants to draw out a road map for globalisation of the profession. He said while the Doha Round has been halted, and the issue of negotiations on services will take some time before it is brought on the table, sooner or later it will have to be tackled by the global community.
Dr Ahluwalia said even after the WTO negotiations commence, the priority will be to deliberate on other issues.
He said India the world over is known for its skills, including accountancy, and opening up of the services sector will be benefical to the country.
Dr Ahluwalia said the question of access of services was critical to India because of the high quality its human resources.
He said the accountancy profession plays an important role in ensuring that companies are run in a proper manner and added that they must not become lax on their watchdog functions.
Dr Ahluwalia said the Indian financial system learnt a great deal from the banking scam of 1991 and the regulator and other agencies played a decisive role in improving the financial standards.
Stressing the role of financial intermediares, Dr Ahluwalia said they would want transparency in the system.
Dr Ahluwalia felt that the Indian financial system had adequate safeguard measures to earn the respect of the global community.