The Hindu : Business : ‘Economy to grow at 8.5-9 per cent’

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Wednesday, Sep 19, 2007
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‘Economy to grow at 8.5-9 per cent’

Special Correspondent

Q2 may witness a deceleration: Montek

‘A moderation in growth rather than slowdown’
Dismal performance of industry in July

NEW DELHI: Even in the wake of an apparent slowdown in industrial growth in July, the Planning Commission on Tuesday projected the economy to grow by about 8.5-9 per cent during the current fiscal.

Reiterating the Commission’s projections on economic growth while speaking to newspersons on the sidelines of a conference on ground water management, Planning Commission Deputy Chairman Montek Singh Ahluwalia said: “We have been predicting a slightly lower growth and the latest industrial output numbers are no reason to reassess the growth estimate.”

‘Tight money no reason’

Noting that the first quarter growth was good, Dr. Ahluwalia pointed out that a slight deceleration was expected in the second quarter this fiscal and the dip would not be as a result of the tight monetary policy adopted by the Reserve Bank of India. “I would rather call it a moderation in growth rather than slowdown… I would call it a successful example of macro-economic management, consistent with extracting non-inflationary potential of the economy by maintaining growth,” he said.

It may be recalled that while the economy witnessed a robust growth of 9.3 per cent in the first quarter this fiscal, the industrial growth slipped to 7.1 per cent in April-July from 13.2 per cent in the same period a year ago, mainly owing to an all-round dismal performance in July this year.

Slump in manufacturing

In particular, it was the manufacturing sector growth which slumped to 7.2 per cent during the month from a healthy 14.3 per cent in July 2006, giving a clear indication of a likely deceleration in economic growth during the second quarter of the current financial year.

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