The deficient monsoon is likely to pull down the economic growth in the current fiscal to about six%, from 6.5% a year ago, the Planning Commission said on Friday.
“If we factor in that agriculture which would not be strong … (growth) would be closer to 6%. I don’t think we have sufficiently strong industrial turn around yet,” Planning Commission deputy chairman Montek Singh Ahluwalia told reporters in New Delhi.
In the case of 12th five-year plan (2012-17), he said the annual average economic growth could be around 8.2% as against the earlier estimate of 9% envisaged in the approach paper to the policy document. As regards 2012-13, the Reserve Bank of India has recently lowered the growth projection to 6.5% from 7.3% in the wake of deficient monsoon and global economic problems.
On whether special schemes were needed to tide over the drought like situation, Ahluwalia said, “I don’t think you need an incentive. These are all issues that state governments have to tackle. They are usually very keen to take corrective measures”.
“India has faced several monsoon failures. There are possibilities that the situation would improve in the coming months”, he added.
“It (Indian Meteorological Department) has actually said that the overall monsoon position in the next two months would be better than the previous two months but the overall would be deficient. There is nothing new in this. We have known that it would be deficient in first two months,” he said. He added: “This isn’t the first drought we’ve had. Droughts do create a problem and we know what to do when they happen”.
On the impact of drought on price situation, he said, “it is true that inflation has been a problem. It has come down from the double digit but virtually all the government forecast say that it will remain around 7% for sometime and that is not good enough”.
Ahluwalia said inflation was under control if it is between 5-6% but “it remains a matter of concern.” Headline or WPI-based inflation in June was 7.25%, while at the retail level it was at an alarming 10.02%. — PTI