Economy may grow by 7-8%, says Montek

Deputy Chairman Planning Commission Montek Singh Ahluwalia today said the Indian economy was likely to grow by 7-8 per cent during the last two years of the Tenth Plan period (2002-07).

"We have not come to any conclusion on ruling out an 8 per cent growth during the Plan, but are looking at what are the prospects now. In the last two years, we have not had much more than 6 per cent growth and it is difficult to reach an average of 8 per cent when only two years are left," Ahluwalia told reporters at a telecom seminar.

"Looking ahead, the growth rate between 7-8 per cent, mentioned in the Common Minimum Programme, should be possible," he added.

On the rising inflation, Ahluwalia said the latest RBI move to hike the cash reserve ratio (CRR) is a right step to check it. "Inflation is an issue and the government is always concerned about it," Ahluwalia said.

Commenting on the transfer of centrally-sponsored schemes to states, he said that no headway was possible without an agreement between the Centre and the states, adding that a sub-committee of the National Development Council was studying the issue.

There was a need to take a good look at the resources available for meeting the CMP commitments.

The finance ministry and Planning Commission would jointly undertake the exercise and work out a strategy. However, the plan body had already allocated Rs 2,020 crore for the food for work programme which would be further expanded next year.

On the left parties' opposition to the hike in ceiling on FDI in telecom, aviation and insurance, he said "the CMP says we need FDI. I hope any disagreement on the modalities over FDI hike in any sector can be overcome".

The economy is likely to grow at less than 7 per cent during the Tenth five plan period. A growth rate of 7-8 per cent would be possible in the remaining two years of the plan, but the average would be brought down by 6.4 per cent average in the first two years.

The average growth rate in the first two years of the plan period of 6.4 per cent and in the current fiscal, a gross domestic product growth of between 6 and 6.5 per cent, is expected.