Economy to grow by 7.75%: Rangarajan

PMEAC Chairman C Rangarajan said economy will grow despite poor performance in agriculture sector.

Updated: Dec 30, 2009, 00:26 AM IST

Hyderabad: Indian economy will grow 7 to 7.75 percent during the current financial year despite poor performance of the agriculture sector on account of drought and floods, said PMEAC Chairman C Rangarajan.

"The economy will grow between 7 and 7.5 per cent overall but agricultural growth may fall by 1 to 2 per cent," Prime Minister`s Economic Advisory Council (PMEAC) chief said while speaking at the College of Defence Management here on the challenges before the Indian economy.

Flagging food inflation as a major concern, he said, "agricultural growth rate should not fall below 4 per cent for food security as 60 per cent of the population are in rural areas."
Although the economy did well during the second quarter (July-September) recording a growth of 7.9 percent, the output of agriculture and allied sector slipped to below 1 percent.

Food inflation in the first week of December soared to a decade`s high of 20 per cent, mainly driven by rising prices of pulses, potato and other vegetables.

Referring to the impact of the widespread drought and devastating floods on the farm sector, Rangarajan said, rice output might decline by 13 million tonnes.

However, he hoped, the rabi (winter crop) would to some extent make up for the shortfall in kharif (summer crop).