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India has potential to grow at 8%: Rangarajan

Last Updated: Wednesday, April 24, 2013 - 16:31

New Delhi: Prime Minister's Economic Advisory panel Chairman C Rangarajan on Wednesday said India has potential to grow at 8 percent without fuelling inflation.

"If you are going to have a investment rate in the range of 32-35 percent, I would still say 8 percent growth rate is potential rate of growth in economy and it is possible to grow at that rate even without provoking high level of inflation," he said at India Summit organised by UK-based magazine The Economist.

As per the latest estimates for 2012-13, investment rate is close to 35 percent, he said.

He further said, "I do not subscribe that view that high growth warrants high inflation..," he said.

Noting that inflation is showing some signs of moderation, he said "of course it is not anywhere near the comfort zone that we would like to have."

Wholesale Price Index (WPI) for the month ended March moderated to 3-year low of 5.96 percent against Reserve Bank's projection of 6.8 percent.

The headline WPI inflation is expected to be around 6 percent in the current fiscal, with primary food inflation around 8 percent, fuel at about 11 percent and manufactured goods at around 4 percent.

On Current Account Deficit (CAD), he said, "it is still high and we need to act."

The government has taken a number of steps in the last few months to narrow CAD including curbing gold import and increasing exports.

The moderation in gold imports is expected to help bring down the CAD to 4.7 percent, from 5.1 percent of GDP in 2012-13.

However, in value terms the CAD is expected to be higher at USD 100 billion, as compared to USD 94 billion last fiscal.

"I certainly believe low growth phase has bottomed out," he said.

Rangarajan said economy can pick up in the current fiscal from 5 percent to 6.4 percent.


First Published: Wednesday, April 24, 2013 - 16:29
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