6% GDP growth next fiscal, better 2nd half in 2013-14: Montek

Hyderabad – Exuding confidence that economy will be back on high growth trajectory, Plan panel Deputy Chairman Montek Singh Ahluwalia on Wednesday said that GDP will expand by over 6 percent next fiscal and performance will be better in second half of this fiscal.

“I could easily say that it (economic growth) will be over 6 percent, depending upon the policy of new government,” Ahluwalia said addressing an event of Indian School of Business here.

“..I think it (revival in the economic growth) will be evident in the next six months..Next year on the other hand, we can reasonably expect a very strong improvement in performance,” he said.

“I expect the second half of current year (fiscal) to be better than the first half. I don’t think that at the moment, we see signs of strong revival yet. But I do get a picture that people think that the (decline) in the economy has bottomed out,” he added.

According to the government data available, India’s Gross Domestic Product (GDP) or economy grew at a decade low rate of 5 percent in the last fiscal.

There seems to be persistent sluggishness in the economy as GDP growth slowed down to 4.4 percent in April-June quarter from 4.8 percent in January-March quarter this year. The economy had grown at 5.4 percent in the corresponding quarter of April-June last fiscal.

Later talking to reporters, Ahluwalia said, “The current account deficit (CAD) will be between 2.5 to 2.7 percent of GDP this fiscal.”

CAD is a difference between outflow and inflow of foreign exchange. It was at USD 88.2 billion or 4.8 percent of GDP in the last fiscal. The Finance Ministry expects it to be at USD 56 billion or less this financial year.

Ahluwalia also said that many of actions taken (by the government) will allow investment to flow in.

Regarding allegations on allocation of coal blocks and spectrum, Ahluwalia said: “The root cause of these problems was the system, in place to allocate the scarce resources which was there before the (UPA) government came in.

“So this was the legacy system, the volume of activity expanded tremendously because this was a period of rapid growth.

“I think the government can legitimately say, I think that should be noted, that the system which led to this problem has been actually changed, which needs the system changed.

“That system change is that all coal blocks should be auctioned and all spectrum should be auctioned,” he said.

He opined that Government was willing and transparent to face the investigations into all those allegations.

On foreign investments into the country, he said the moods will change in favour of India even if the growth rate reaches 7 per cent (as against higher growth estimates in 8th plan).

He however, felt that the Government needs to improve infrastructure and put it on the top of the agenda.

According to him, the growth will not slow down?though general elections are scheduled to be held in six months, as the current issues that the country is faced with are not structural related problems.