Zeenews Bureau/ Stanly Johny
New Delhi: Indian economy is unpacking a “better than expected” performance in the current year and the gross domestic product (GDP) is expected to expand more than 7 percent during the fiscal, Planning Commission deputy Chairperson Montek Singh Ahluwalia said on Wednesday.
“The recent indications sow that the economy is performing better than people thought it would. Therefore there’s a need to revise our growth forecast,” Ahluwalia said here while addressing the 104th annual session of the PHD Chamber.
We will end the current year better than 7 percent. How much better it would be is difficult to predict now,” said an upbeat planning commission deputy chief.
The planning commission earlier predicted that the economy would expand between 6-6.5 percent in the current fiscal.
But, taking many analysts and policy makers by surprise, the economy grew 7.9 percent in the second quarter of 2009-11, thanks to the massive public spending and the stimulus measures of the government.
According to Ahluwalia, inflation is not a long term threat to the economy.
“What we see now is not the generalized inflation. It is sector specific… Non-food part is not rising that much.”
He expressed hope that prices would come down by January next year as the government is using “all instruments available” to tackle the situation.
Ahluwalia, however, expressed concerns about the exports sector.
“Export situation is very difficult. The exporting community is the worst hit by the recession as there’s a sharp reduction in demand in overseas markets.’
According to him, the demand situation in advanced developed countries would not go back to the pre-crisis level at least for five years.
“So, what we can do is to stimulate the domestic economy. We should inject demand into the domestic market to offset the demand reduction in the global markets,” said Ahluwalia.
Asked whether the government would withdraw the stimulus measures, the planning commission official said if the economy returns to 8 percent growth in the next fiscal the stimulus could gradually be withdrawn.
“If things return to normal, we should bring the fiscal situation als to normal. We cannot have the fiscal deficit to go on and on.”
Earlier in the day, while giving the inaugural address at the conference, Finance Minister Pranab Mukherjee said the economy would grow 7.5 percent in the current fiscal and return to 9 percent in two-three years.