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"Interest rate hike will not hit growth"

Fiscal deficit to be in line with projected target

Mumbai: The Prime Minister's Economic Advisory Council Chairman C. Rangarajan on Tuesday said the hike in interest rates would not affect the economic growth as the fundamentals were strong.

"The economic growth momentum will be sustained at over eight per cent levels this year ... and the interest rate hike will not impact economic growth," he said.

Speaking to reporters on the sidelines of a function here, Mr. Rangarajan said the fall in industrial output to six per cent in October could not be taken as an indication of a `slow down in the Indian economy'.

Agricultural growth

He admitted that agricultural growth had not been of the order necessary to maintain a high level of employment.

"Agriculture plays a very important role in our economy as nearly 60 per cent of our people are dependent upon it. For better quality employment, the agriculture sector needs to grow." He also called for better irrigation facilities.

Fiscal deficit

On the fiscal deficit, he said it would be in line with the Fiscal Responsibility and Budgetary Management (FRBM) Act target. "It is at a level higher than projected numbers but revenue buoyancy this year has been very strong and hence I expect fiscal deficit to be in line with the projected target," he added. — PTI

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