Rangarajan expects 6.7% growth this fiscal

CHENNAI: India’s growth rate is expected to pick up in the second half of this fiscal and reach 6.7% during FY13, Prime Minister’s economic advisory council chairman, C Rangarajan, said on Monday.
Stating there were indications to this effect like the monsoon, which has turned out to be better than predicted, Rangarajan said, “Our own forecast is that the growth rate of the economy in the current year will be 6.7%.I think the growth will pick up in the second half of this year.” He was speaking on the sidelines of the annual day of the Madras School of Economics, of which he is the chairman.
Rangarajan said the agricultural performance this year would also be better than what was expected a few months ago. “Taking all these factors into account, I expect there will be a growth rate of 6.7% in the current year.” Economic growth had slowed to a nine-year low of 6.5% during 2011-12. The GDP growth in the April-June quarter was 5.5%, lower than 8% during the same period last fiscal.
On the diesel price hike, he said it would result in some increase in the wholesale price index as well as other indices. “But in the absence of increase of diesel price, the fiscal deficit would have been higher. Therefore, one has to balance against the other,” he said.
Rangarajan defended the diesel hike, which has evoked opposition from various quarters, saying it was appropriate in the medium term so as to contain inflation. “Even in the case of diesel, nearly two-third increase in the price of crude oil is being borne by the government and the oil marketing companies. Therefore, only one-third of increase in the price of crude oil is being passed on to the customers,” Rangarajan said.