‘Economy will grow at eight percent this fiscal’

August 7th, 2008 - 10:29 pm ICT by IANS  

Chennai, Aug 7 (IANS) The Indian economy is expected to grow at eight percent this fiscal, and inflation would moderate in a year’s time, said a top government official here Thursday. “The inflation rate in a year’s time will be in the range of five-six percent and the interest rates will be at seven-eight percent levels,” said Arvind Virmani, chief economic advisor to the finance ministry.

Addressing a seminar on “State of the Indian Economy”, organised by the Confederation of Indian Industry (CII), Virmani said: “The average growth rate for the next four years will be around nine percent.”

He asked the financial analysts, who were present at the programme, to differentiate between trends and cycles and plot their projections without confusing the both.

“We predicted nine percent growth rate for the 11th plan period when others predicted higher rate,” he added.

According to him, the major growth drivers are manufacturing, construction, storage and agricultural sectors.

The rate of investment growth in manufacturing sector has been 30 percent for last four years.

He said the sky-high inflation was due to the global cost push. The global increase in prices of crude and edible oil and iron ore has contributed to high inflation, Virmani said.

“When one compares the Indian WPI (wholesale price index) with that of the US producer price index, it will be surprising to note that the latter is much higher than the former,” he said.

He urged the government to go for productivity increasing reform measures and also accept the recommendations of the Chaturvedi Committee report on pricing petrol, diesel and liquefied petroleum gas (LPG).

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