Indian labourers erect a structure in Ahmedabad, 2011. India's economy could accelerate by as much eight percent in the next fiscal year despite a difficult global climate, a top government panel said. © AFP/File Sam Panthaky
NEW DELHI – India’s economy could accelerate by as much eight percent in the next fiscal year despite a difficult global climate, a top government panel said Wednesday.
Asia’s third-largest economy has lost momentum since the central bank raised interest rates 13 times since March 2010 to tame inflation from near double-digits to its current 26-month low of 6.5 percent.
“We might be able to reach a growth rate of eight percent” in the next fiscal year to March 31, 2013, said C. Rangarajan, head of the Prime Minister’s Economic Advisory Council, putting the range at between 7.5 and eight percent.
He projected inflation for next year at five to six percent.
“But to get back to nine percent growth we need a more hospitable global environment,” Rangarajan said. “Until the global environment clears, we should be able to achieve eight percent (annual) growth.”
Government experts see nine percent growth as a minimum to substantially reduce the crushing poverty afflicting hundreds of millions of Indians.
Rangarajan forecast growth of 7.1 percent growth for the current fiscal year that ends on March 31, the slowest rate in three years and far below the panel’s initial bullish forecast of nine percent expansion.
His prediction, which noted strong farm and service sector growth, was slightly higher than the government’s official estimate of 6.9 percent expansion for this year.
The forecast of faster growth and lower inflation is welcome news for the national Congress ruling party, which has been buffeted by a string of corruption scandals and accusations of policy paralysis.
But the council’s growth forecast for next year was much more optimistic than those of many private economists — some of whom expect growth in the low six percent range.
India’s economy grew by 8.4 percent in the last fiscal year to March 31, 2011.
