India's economy to grow at around 6%, says Ninan

The Indian economy was likely to grow at a shade below six per cent in the current fiscal, if the monsoon went awry, said T N Ninan, editor and publisher of Business Standard.

Addressing members of the Indian Chamber of Commerce (ICC), Ninan said a 6.5-7 per cent growth rate was impossible and it would be under six per cent.

Ninan pointed out that between 1992-1998 the average GDP growth rate was at 6.3 per cent and during the Vajpayee government it was at 5.7 per cent. Ninan said, it would be business as usual from the new government and no exhilarated growth should be expected.

He pointed out that there would not be any serious attack on subsidies from the UPA government and the goevrnment had turned its back on labour policy, while physical infrastructure was still a question mark. Ninan also spoke at length on the futility of the budget exercise and its impact on the Indian economy.

Significant shifts in economic tempo over the last decade were irrespective of the policies announced in the union budget.

Ninan cited instances to show that the slowdown and recovery since 1996 was brought about either by the monetary policy or by some extraneous factor like structural changes in the international economy.

Ninan was speaking at a discussion on the budget organised by the Indian Chamber of Commerce (ICC).

He said, in 1996 the sharp increase in interest rates coupled with the Asian crisis were responsible for the slowdown. The subsequent recovery in 2000 could be attributed to the boom in the technology sector.

Similarly, the slowdown in 2002 and the recovery last year was also independent of policies in the budget."The real driver for change has been the monetary policy" said Ninan.

Another factor, which plays a crucial role in the performance of the economy was monsoon. Ninan said, if the economy had slowed down at present, one of the reasons was the possibility of a near-drought situation. Extraneous factors like policies announced by Alan Greenspan also affects the Indian economy more than the budget.

Ninan also pointed out that the impact of budget on the stock markets was limited. "Budget related trends in the stock market are not sustainable" he said.

The irrelevance of the budget was further pointed out when Ninan said that bulk of government spending was pre-committed and there was very little left for the finance minister to do, in terms of changing the patterns of spending.