Even as Finance Minister Pranab Mukherjee on Thursday scaled down India's GDP (gross domestic product) growth projection from 9 per cent to 8 per cent for the current fiscal — in line with the Reserve Bank's estimate in its annual credit policy — his Chief Economic Advisor Kaushik Basu here indicated an official downward revision in the growth forecast for 2011-12.
According to reports, in his interaction with the media on the sidelines of the annual meeting of the Asian Development Bank being held in Hanoi, Mr. Mukherjee said: “If oil prices continue to rise, it would be difficult to achieve higher GDP. [India's] GDP [growth] may come down to 8 per cent from [the projected] nine per cent”.
Explaining the reason for the lower growth forecast, Mr. Mukherjee said that India's primary concern now is to contain headline inflation while sustaining high growth. “Our projection is 7.5-8 per cent inflation during the year,” he said, as hardening of global commodity prices, particularly oil, has accelerated inflation. Speaking to reporters here on the sidelines of a media launch of ESCAP's ‘Economic and Social Survey of Asia and the Pacific – 2011' Dr. Basu reasoned that the ‘unacceptable' level of inflation has necessitated revision in the growth estimate which was projected in the budget at 9 per cent for the current fiscal. “All over the world, there has been revision [in GDP growth prospects] ... So we might go in for a revision. Obviously, it is not going to be upwards,” he said.
Dr. Basu pointed out that as the government takes a mid-year stock of the economy during the course of the year as a normal practice, the Finance Ministry would begin reviewing the targets by the end of this month.
