Economy to grow around 7.5 percent, job market safe: Ahluwalia (Lead)November 18th, 2008 - 9:59 pm ICT by IANS
New Delhi, Nov 18 (IANS) Despite an uncertain economic outlook, India is expected to grow around 7.5 percent this fiscal and the total number of jobs will not go down, a top government official said here Tuesday.”Though everything is uncertain, yet we should grow somewhere between seven and 7.5 percent in the current financial year,” Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters on the sidelines of the World Economic Forum-India Economic Summit.
“We ourselves are talking of rate between seven and 7.5 percent. I found that a substantial adjustment,” Ahluwalia said at the closing session of the summit.
But, striking an optimistic note, he said even if the growth rate is “two percent less than what we have thought as normal, it is still much better growth rate than what we had four years ago”.
However, we should not be hung up on a particular number, he added.
On inflation, he said: “Seeing the current trends, the inflation will certainly go down more” and it was now not “as serious priority as it was” a few months ago.
According to him, the government’s response to the financial crisis was not different from the steps taken by other major countries after mid-September.
“Monetary policy has changed course… We have given ample indication that we are watching the situation and we will not hesitate to do more,” Ahluwalia said.
He, however, noted that the next year’s economic performance was linked to the global conditions. “We should basically assume that if the world economy does not do better in 2009-10 than in 2008-9, then it will be difficult for us to do better than what we do this year,” he said.
Faced with a “weakness in international demand”, Ahluwalia felt that India should “step up investment in infrastructure, both in public and public-private partnership… There are existing pipeline of projects that can be accelerated, like the three ultra mega power projects”.
Besides, he asserted that the total number of jobs in the economy will not go down. “It is quite possible that in some of the badly-affected sectors, you may see a contraction.”
“In many rapidly growing firms, firms that had anticipated a 30 percent growth and are suddenly having to adjust to a 15 percent growth, you may find that they are suddenly trimming a lot of people,” he said.
Commenting on Finance Minister P. Chidambaram’s request to the industry to cut down prices to spur demand, Ahluwalia said: “Whenever there is a shortage of demand, there is a pressure to lower prices.”
The prices of most of the products have already come down, he added.
“We need to make stronger efforts in promoting exports and also to increase public expenditure,” he said.