Chief economic adviser Ashok Lahiri talks to Subhomoy Bhattacharjee on some of the macro assumptions in the Budget
What is the growth rate for the economy that the Budget projects for the next fiscal?
For the preparation of the Budget you do not really need to calculate the real rate of growth. But I do not think that I am letting out a state secret when I say that the nominal growth rate for 2003-04 is estimated at just above 11 per cent. At a very high level of sophistication, maybe one might need to calculate the real rate of growth.
But there is some disquiet on the growth rate of the economy.
There should not be. We have actually fared well and the Budget has focused on the creation of a sustained growth impulse. If, for instance, the agriculture sector puts in a better performance by moving into positive territory, the gross domestic product (GDP) would also swing up. Agriculture has a 25 per cent weightage in the GDP. But also remember that growth is not an evolutionary process. It jump-starts.
Who would have thought that India would be bracketed with China and South Korea as the drivers of Asian economic growth? But that is happening. Do you know that in 2001, India was the largest destination for private equity, outstripping Australia, China and South Korea? In the Nagraj lecture, C Rangarajan has pointed out that India is an epic tragedy in public relations and marketing. We do not acknowledge that which is due to us.
There is a feeling that the oil subsidy bill has been under-provided for in the Budget.
Not really. It is my hunch that the worst of the oil price peak is already behind us. In the Gulf crisis of 1991, the crude prices peaked on news of the impending invasion of Iraq and started declining immediately after the attack actually occurred. It is the uncertainty that creates a problem.
Besides, there is also a school of thought that feels that oil has a far lower impact on the economy than people make out. For instance, just divide the GDP by the annual oil import bill
