Bangalore, Oct 30 (UNI) India Inc's forecast of the GDP dropping to seven per cent level during the current fiscal was a pessimistic forecast, but still good enough for a growing economy like India, Planning Commission Deputy Chairman Montek Singh Ahluwalia today said.
Speaking to reporters on the sidelines of a function at IT major Infosys here, he said the latest RBI policy document lowering the GDP rate in the range of 7.5 to eight per cent and this was good for a emerging economy like India.
Even in China, the GDP growth had fallen from 11 per cent to nine per cent, he pointed out.
The expected drop in the growth rate had been minimised due to swift action taken by the Union Government as global economic slowdown was very severe, he added.
''This year's projections will vary. Even if it is going to be a seven per cent growth, we are feeling the pain in going down from nine to seven per cent. The focus will be to keep the growth rate as high as possible and generate maximum employment. What is important for us is to get back to higher growth rate. This is not going to be a permanent phenomena,'' he said.
He said the proposed outlook on fiscal deficit at three per cent, might not happen this year due to 'contra cycle' period, which the world economy was going through.
''This year financial deficit is likely to be more than expected.
We are facing a compelling and exceptional circumstances. The whole world had been hit by financial crisis and India will have to face its effects,'' he opined.
Stating that FRMB Act prescribed limit was only applicable in normal situation and cannot be read in these extraordinary times, he said the FRMB roadmap was to ensure fiscal discipline and to ensure that fiscal deficit did not build up. However, now it could not be applied.
Everyyear whatever happened in the West did not have much impact on the Indian economy but the present scenario was different, he added.
Ruling out any drop in the prices of fuel, he said the prices in the country had never reflected the global prices as the government ensured proper cushion when crude prices soared.
Now the oil companies were covering up their old losses and the present lower crude prices was helping the oil companies to reduce their deficits, he added.
Mr Ahluwalia said the inflation rate, which had dropped to 10.68 per cent this week, would come down further due to various policy measures initiated by the Centre.
''Recent movement in wholesale price index has been lowest in two months. Underlying the rate of inflation, it is much lower than the Wholesale Price Index (WPI). The annualised rate of inflation had seen only four per cent increase. The inflation rate would go further down in the coming months,'' he said.
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