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| Indian Economy : Current Status and Select Issues
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| Professor Parikh, Professor Radhakrishna and Friends,
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| I am thankful to Professor Radhakrishna for giving me the opportunity to be here for the release of India Development Report 2004-05. The Report prepared by IGIDR, released today, is unique in several respects. It addresses contemporary policy issues unambiguously and is more issue-based than technique oriented. At the same time, it is based on thorough research with scholarly inputs. Being issue-oriented, the Report captures both macro and micro aspects, especially the institutional aspects of development and human welfare.
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| While being highly analytical, drawing on theory, the Report has no ideological biases and one should be delighted to note the India-centric nature of the policy prescriptions. This Report is special in the sense that it lays significant emphasis on welfare and the social sector. I have no hesitation in strongly recommending this Report to students and scholars alike and to the policy makers and analysts as well.
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| No doubt, there are some areas where the observations in the Report do not fully conform to the policies being pursued by RBI, but such differences in approach do help fine tune the policies better; though most of the differences arise from the assumptions made: the assessment of risks in alternate paths, weights to be attached to relevant factors, operational feasibility contingent upon the political economy, the institutional considerations, etc.
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| So, let me compliment all the authors, and in particular Dr. Parikh and Dr. Radhakrishna for this illuminating volume.
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| I will take the opportunity, not to comment on the Report which is highly recommended for detailed reading, but to supplement it with a few remarks on current status of the economy and refer to select issues.
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| On October 26, 2004, we set out in the Mid-Term Review of Annual Policy Statement for the year 2004-05 that the overall GDP growth for the year 2004-05 would be in the range of 6.0 to 6.5 percent. Subsequent developments indicate that while monsoon conditions and sharper rise in oil prices had a moderating effect on growth, the manufacturing sector and exports have been performing better than expected. With the economy growing at 7.4 percent in the first quarter and 6.6 percent in the second, the GDP growth in the first half of the year works out to be about 7.0 percent. Unless there are totally unexpected shocks, inspite of some adverse impact of Tsunami which is localised, the projected GDP growth for the year in the range of 6.0 to 6.5 percent should materialise comfortably.
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In response to the impact of Tsunami, RBI has adopted a three-track approach. First, ensuring supply of currency, banking services with relaxations in procedures, as appropriate, liberal provision and restructuring of credit for consumption as also resuming productive activities, finance for rebuilding houses and coordinating with state governments, NABARD, NHB and commercial banks. This process is still underway and the RBI
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