Click to play videoNew Delhi: Planning Commission Deputy Chairman Montek Singh Ahluwalia says India's long term growth is still intact though there could be a setback in the short-term due to the global economic crisis.
"We should minimise the impact as much as we can looking at contra cyclical policy and by the time the world recovers in three year from now on we can get back to what was our base projection. But I have to say that virtually all the models indicate that India's ability to grow at high compared to rest of the world is not affected," Montek Singh Ahluwalia said while attending a seminar with policy experts in New Delhi on Saturday.
Montek added that the current global economic crisis can wipe out India's growth by 1.5-2.5 per cent in the next two years, as per the projections of various economic think-tanks before the Planning Commission.
"There is a lot of uncertainty but compared to the base run, growth can be between 1.5-2.5 per cent lower," Montek said.
India's ability to grow at a high rate is not affected, he said, but may be lower than what was projected in the 11th Five Year Plan.
According to the projections by Delhi-based NCAER, the GDP growth rate during 2008-09 could slip to 6.2 to 6.7 per cent depending upon the impact of the meltdown and the steps taken by the government to neutralise it. It further said the growth would increase 7.4-7.5 per cent in 2009-10.
The Institute of Economic Growth (IEG) said the 11th Plan growth rate could fall to as low as 5.3 per cent from an average of 8.38 per cent envisaged in the document. On the higher side, the average growth rate during the plan period could be 8.05 per cent, it added.
In addition, the presentations were made by the Indira Gandhi Institute of Development Research, Mumbai, and Indian Statistical Institute, Bangalore.
In its presentation before the Plan Panel, NCAER lowered the economic growth forecast to 7.6 per cent from 7.8 per cent projected earlier in July.
Montek said the general conclusion from the presentations made by various institutes is that "it is very clear that if you have the kind of negative outcome in the global economic situation (as you have at present), it will have a negative impact on India".
Planning Commission member Kirit Parikh said the government should take counter-cyclical measures in the form of fiscal measures, like spending more money in infrastructure, which would increase the productivity of the economy.
He said they are in talks within talks with various ministries on what measures should be taken to mitigate the negative affects of the crisis.
(With inputs from PTI)
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