Jalan hopeful of 8 per cent GDP growth

Jalan hopeful of 8 per cent GDP growth
ENS ECONOMIC BUREAU

Mumbai, Feb 20: One may be looking at a scaled down GDP growth rate of 6 per cent plus a lower business confidence figure at 98.8, but Reserve Bank of India (RBI) governor Dr Bimal Jalan remains unfazed and is of the view that the economy can still grow at 8 per cent in the medium-term.

Speaking at a seminar on `State of the Indian Economy' organised by the Indian Merchant's Chamber (IMC), Jalan said: "It all depends on how you look at it. You had bad monsoons, but foodstocks are at record high levels. Exports are up and forex reserves are at record levels. You have droughts, but there is no starvation. Twenty five to 30 years ago, it would have led to a very difficult situation. And amidst all this, we have a 6 per cent growth rate."

This observation came after a presentation by Shashanka Bhide and Pradeep Srivastava of the National Council for Applied Economic Research's division of macro-economic monitoring and forecasting.

"The economy is resilient enough to handle such situations as last month's earthquake in Gujarat... I have confidence in our future and I believe that given the entrepreneurial and individual ability and above all our collective confidence in our own future, nine per cent growth is achievable. If not nine, definitely eight per cent," Jalan said.

The country's GDP growth is expected to slow to 6 per cent in the current year from 6.4 per cent last year, but Jalan said that this rate was still impressive compared to other developing and developed nations. "The economy has changed fundamentally and the strength of the Indian economy is that it can take any upside and downside with equal ease," he said. He also used the occasion to give a medium-term assessment of the economy.

On disinvestment, Jalan said that it was not a question of the public versus private sector. "And if you thought that this meant a pat on the back for the private sector on efficiency," Jalan touched upon the Sebi appointed LC Gupta committee report which stated that retail investor interest, even in the bonds of top-rate private-sector outfits were low and this was in a way linked to the issue of corporate governance.

Jalan said the manufacturing sector would have to hasten the pace of absorbing technological changes to face global competition. "Technological changes in Indian industry have been slow despite rapid strides in information technology and hike in productivity is yet to reach down the line," he said, adding, "The task before comapanies and government was to work for growth at micro level in industrial units and departments."

"Deterioration in the quality of public services like education, environment had to be improved to support high growth," he said adding barely three per cent could benefit with better services and "we have to ensure access for rest 97 per cent as well."

Bhide said bad monsoons and low agriculture production had partially affected growth in 2000-01. The industrial growth was also down at at 5.71 per cent for nine months of this fiscal as compared to 6.44 per cent in same period last year, he added.