Hyderabad, Sep 17 (Inditop.com) Indian economy will see “definite signs of recovery” in the second half of the current financial year and will grow between 6 and 6.5 percent in the fiscal, Prime Minister’s Economic Advisory Council chairman C. Rangarajan said here Thursday.
India’s growth rate in 2008-09 was 6.7 percent as compared to 9 percent in the previous year. “Prospects for the current fiscal do not appear to be better. While in 2008-09, the first half escaped the impact of global recession, in the current year the impact will be felt throughout the year,” Rangarajan said.
“However, the country will see definite signs of recovery from the second half of the current fiscal,” he said while delivering a keynote address at a conference on the global economic meltdown.
According to Rangarajan, next fiscal would see a distinct improvement in growth and the economy would grow between 7 and 8 percent.
However, to go back to 9 percent growth, “we have to wait for the world economy to improve and world trade to pick up”, he said.
The former Reserve Bank of India (RBI) chief said the Indian economy was not directly impacted by the global meltdown as the country’s financial system was not directly exposed to the “toxic” or “distressed” assets of the developed world.
“This is not surprising since Indian banks have very few branches abroad. However, the indirect impact on the economy because of the recession abroad is very much there.”
While India’s import bill reduced sharply as a result of the fall in international commodity prices, particularly crude oil, the recession abroad had adverse effect on exports of goods and services.
The capital flows were also hit. “In contrast to the strong inflow of over $108 billion in 2007-08, last year saw a net increase of only $9.1 billion in capital flows,” Rangarajan said.
The budget estimates of total expenditure for 2009-10 are 37 percent higher than the budget estimates of last fiscal.
Rangarajan later told reporters that central fiscal deficit during the current fiscal would not exceed the estimated 6.8 percent.
