Mumbai: India is unlikely to return to nine per cent growth rate before 2012 as the global economy is expected to take at least two more years to recover.
"It would be unrealistic to expect that the average
growth rate over the next five years would be nine per cent. A
more realistic assessment would be that India would revert to
the nine per cent growth rate by the end of the Eleventh
Plan (2011-12)," former RBI Governor S S Tarapore said.
At an event organised by Dan & Bradstreet last evening,
Tarapore said it would be necessary for the global economy to
recover fully for the economy to revert to 8.5 to 9 per cent
Welcoming the Government`s plans of stepping up
investments in public and private sectors, he said that as
these sectors have a long "gestation lags", increased
investment in these sectors could not be reflected in an
immediate increase in output.
The present Government, he said, has quite correctly
given a policy tilt to poverty alleviation, thereby
emphasising the quality of GDP growth.
"A basic dictum of microeconomic policy is that the
pattern of investment determines the pattern of output and the
pattern of output, in turn, determines the distribution of
income," the former banker said.
"This is the underlying rationale for the strong tilt in
the Union Budget for 2009-10 towards social sector investment.
Ultimately, enduring growth requires that it be inclusive,"
He, however, does not agree with the Government`s policy
of financing its large fiscal deficit without crowding out of
the commercial sector and increasing interest rates.
"If we are able to attain all these objectives without
the attendant pain, it would be ideal, but unfortunately after
unrestricted sinning, it is not easy to move to paradise
again," Tarapore said.