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10 per cent GDP growth difficult unless rural growth too picks up'

Written by: Staff

Mumbai, Mar 6 (UNI) The ten per cent GDP growth targeted by the Indian government will be difficult to achieve unless the rural sector also begins to contribute significantly, Mr Ratnesh Kumar, Director, India Equity Research, Citigroup, today said.

''Presently, the rural sector contributes only 20 per cent towards the GDP,'' Mr Kumar pointed out, adding that unless this picked up, the target of ten per cent GDP growth would be difficult to achieve.

There has been an explosive urban growth, which will outpace rural growth,'' he said, pointing to reasons such as increasing urbanisation and failure of the concept of retail credit to penetrate rural areas.

It is also vital for the authorities to plan to maintain enough liquidity in the Indian banking system, Mr Kumar said talking to reporters on the occasion of the two-day Citigroup India Investor Conference, 2006, being held here.

Mr Kumar said that he expected ''wholesale credit to pick up from now onwards and this warranted that enough liquidity be maintained in the banking system.'' ''Till now, as far as bank credit was concerned, it was mainly retail credit but now this is likely to change,'' he averred.

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