Chief Economic Adviser Kaushik Basu on Wednesday said slowdown in decision-making, high inflation and global uncertainty were the mains reasons for the dip in economic growth to 6.9 per cent. However, he said in the full financial year, the growth was expected to be around 7.5 per cent. The economy grew by 8.5 per cent in 2010-11.
Mr. Basu expressed the hope that the situation would improve from January onwards. “There are three causes for this temporary slowdown in growth. They are slowdown in global situation...so it is in a gloomy global scenario that India's growth has slowed down. We are battling high inflation. There is no getting away from that and there is some slowdown in decision-making,” Mr. Basu said.
Mr. Basu said he expected a rebound to take place by the last quarter enabling the economy to grow by 7.5 per cent in 2011-12.
He said given the performance of the Indian economy in recent years, the 6.9 per cent growth in the second quarter of 2011-12 is disappointing.
Planning Commission Deputy Chairman Montek Singh Ahluwalia attributed the decline in second quarter gross domestic product (GDP) to slowdown in investment.
“My expectation is that GDP growth may end up being about the same in the third quarter (October-December) and perhaps in the fourth quarter it will improve. The growth rate is going to be between 7 per cent and 7.5 per cent this fiscal,” Dr. Ahluwalia told reporters here.
“We should definitely try for rebound in the next fiscal. The key to that rebound is getting investment back on track, particularly in infrastructure,” he said.
