New Delhi, Nov 25 (UNI) Planning Commission Deputy Chairman Montek Singh Ahluwalia today said there was no plan to lower the target of nine per cent growth rate for the Eleventh Plan nor recast the Plan as the impact on the Indian economy of the global downturn was of a "temporary nature," but said a review needs to be made of these issues in January or February next year.
Addressing the Economic Editors Conference here, Dr Ahluwalia said the Indian economy has been hit by the global downturn and the country is prepared for a growth rate of about seven per cent in the current fiscal.
Dr Ahluwalia clarified that the 10 per cent projection of growth rate in the terminal year of the Eleventh Plan meant that enough momentum and growth impulses will be generated in the economy which can sustain a growth rate of this magnitude.
He said there was no need for revising the growth projections of the Eleventh Plan nor recast the Plan as the "shock" on account of the global turmoil was of a temporary nature.
Dr Ahluwalia said slowing inflation would give greater flexibility to the Central Bank in operating monetary policy.
"The RBI has said growth could be 7.5 to 8.0 per cent. It is more likely to be shaded downwards. We are preparing for as low as 7 per cent growth," Dr Ahluwalia said.
"I am consistently of the view that when inflation comes down further it gives greater flexibility in monetary policy." Dr Ahluwalia said he expects agricultural growth rate at 4 per cent for the year ending March 2009. He described the turnaround in agricultural growth rate to be major achievement of the UPA government as it inheritied an economy where agriculture for the past several years was growing at two per cent or even less.
Dr Ahluwalia noted that the slowing down of the economy would be from a robust level of nine per cent level witnessed in the past few years.
He explained that the nine per cent growth projection for the Eleventh Plan was an average figure for the five years.
He, however, said rebound of the Indian economy is expected in the second half of 2009, adding that growth projections are made on the assumption that world economy will not undergo any major swings.
According to the worst case scenario, Dr Ahluwalia said, the global economy may not recover before December-end. Therefore, it was difficult to make an accurate assesement as to when the dip will turn into a recovery---both as regards Indian and global economy.
When asked how different states would be impacted by the global slowdown, he said it was correct to assume that different States would feel the ripples in different ways. Naturally, those states, which have a greater dependence on exports and foreign flows will be hit more than others.
Dr Ahluwalia said while the idea of measuring the impact on different states would be a productive academic exercise, the Commission has not undertaken any such initiative.
The Plan Panel Deputy Chief said the Commission's strategy would be to counter the slowdown in private investment by adopting a contracyclical policy of pump priming the infrastructure sector.
He said the infrastructure sector is sought to be given a boost by enhancing both public spending and giving a boost to Public-Private Partnership (PPP) projects in the sector.
Dr Ahluwalia said he was drawing up a plan in this regard, which he will take before the Finance Minister and Prime Minister.
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