31Dec : As India walks past a tumultuous year to enter 2009, the country’s top think tank PMEAC on Thursday said the country can achieve a seven per cent growth rate in the next fiscal despite a global financial meltdown impact.
"It is a slowdown, but not as disastrous as being talked about," Chairman of the Prime Minister’s Economic Advisory Council Suresh Tendulkar told the news agency while speaking about the growth prospects and challenges for the government in 2009.
"If we are able to push investment in the infrastructure sector, we can be having seven per cent growth in the next fiscal. However, we need to cut cost and increase productivity to push growth," he said.
As regards the current fiscal, Tendulkar said, the Council will revise its growth projections for 2008-09 in the wake of the global crisis and its direct and indirect impact on the country.
PMEAC, which had earlier projected a growth rate of 7.7 per cent, will come out with revised projections in January. The country witnessed a growth rate of 9 per cent in 2007-08.
Assocham President Sajjan Jindal also said the economic recession has touched its bottom and fiscal 2009-10 will bring in better economic scenario for the country.
According to the World Bank projections, India is likely to clock a GDP growth of 6.3 per cent in the current fiscal, which can slip to 5.8 per cent in 2009.
The International Monetary Fund too in its November update of the World Economic Outlook scaled down the growth forecast for India for the current year to 7.8 per cent from 7.9 per cent and for 2009 to 6.3 per cent from 6.8 per cent.
However, the World Bank has projected shrinking of the global trade by 2.1 per cent in 2009 that could have implications for Indian exports, which after a period of seven years, registered a negative growth of 12.1 per cent in October
Commenting on the growth prospects next year, ICRIER Director Rajiv Kumar said, "I can’t see growth improving fastly in the first half of the next year".
"In the second half, if the government takes right steps now and takes complete structural reforms, we can see some improvement".
As regards the challenges in the next fiscal, he said, "The government will have to focus strongly on the growth of exports, which has fallen sharply due to recessionary trends in other countries".
"We have to prevent downturn from becoming too deep and long term. Keeping export growth high is a challenge. We should focus on raising our agricultural productivity as well, for 50 per cent of our population depends on it," Kumar added.
Echoing similar views, Crisil Principal Economist D K Joshi said, "The growth will be weak and slow in the first half. Mild recovery can be seen in the second half. The worst would be over by that time."
The government, he said, should provide a well targeted stimulus now.
"More credit needs to be provided so that the sliding effect can be curbed," he added.
Banks, investors and consumers, Tendulkar said, would have to collectively play a pro-active role to prevent any sharp downturn in the economy.
"Adjustment should be there for sustaining growth rate," he said.
In order to combat economic slowdown, the government announced a stimulus package, which included steps like 4 per cent cut in excise duty and raising public expenditure by Rs 20,000 crore for infrastructure sector.
The government also sought the approval of Parliament to raise public expenditure by Rs 1.47 lakh crore, over and above Rs 7.5 lakh crore envisaged in the budget for 2008-09.
In addition to various fiscal and monetary steps, the government is also working on another stimulus package which is likely to be unveiled early January.