Staff Reporter

Large fiscal deficit will put pressure on governments

Food grain stock sufficient to control prices

COIMBATORE: The 6.7 per cent growth recorded in 2008-09 by India in spite of global financial crisis and recession in advanced countries, shows the country’s economic resilence, said M. Govinda Rao, Director, National Institute of Public Finance and Policy, and Member, Economic Advisory Council to the Prime Minister.


Delivering the Evangeline Memorial Endowment Lecture at Karunya University, he said many experts believed that the worst was over as far as India was concerned and it was on a path towards recovery.


“The drought situation prevailing in the country is likely to drag down the growth rate. Despite recent revival of the monsoon in central and North India, the agriculture output was likely to decline. This would have some adverse effect on manufacturing as well,” Mr. Rao said.

In 2009-10, the estimated fiscal deficit was 10.3 per cent of the Gross Domestic Product.

“The large fiscal deficits and the pattern of borrowing are likely to put severe pressure on policy calibration by the Government and the Reserve Bank of India.

“The net market borrowings for the Centre and State governments for 2009-10 is estimated at Rs. 4.3 crore or about 7.2 per cent of GDP,” Mr. Rao said.

Although the prevailing stock of food grains could suffice to keep the food prices under control, it may be difficult to control the price of pulses, sugar, edible oil, fruits and vegetables, Mr. Rao said.

Paul Dhinakaran, Chancellor, Anne Mary Fernandez, Registrar, and Paul P. Appasamy, Vice-Chancellor, of the university, spoke on the occasion.