Rangarajan sees growth in economy

C. Rangarajan, chairman of Economic Advisory Council to the Prime Minister, said he expected the Indian economy to pick up next year at the back of a significant growth rate in industrial sector in the second half of this year.

The growth rate of the country was expected to be 6.5 per cent at the end of the current fiscal and it could touch 7 to 8 per cent next year. The country would reach 9 per cent level when the world economy recovered from recession and the world trade picked up, Mr. C. Rangarajan said, while delivering the Burgula Ramakrishna Rao endowment lecture at the Osmania University here on Thursday.

Direct impact

Mr. Rangarajan said India escaped direct impact of recession because its banks were not exposed to ‘toxic agents’ that affected the disease elsewhere in the world. In fact, the country did not have recession. It only had slowdown in growth due to decline in production. The country’s agricultural gross domestic product will decline by two per cent this year, but it will be compensated by growth in industrial and service sectors.

He lauded the extraordinary measures taken by the Central government to offset events of financial collapse in the developed West. However, they would have to be slowly withdrawn depending on how fast world economy grew. The world economy had indeed started recovering and the current year will show some positive signals. In that case, there was a possibility of the Central government withdrawing the steps next year. However, the gem and jewellery industry will pick up only after world economy improved, he added.

A major concern for policy makers in the country this year, he said, was the substantial increase in food prices. Rice, pulses and sugar have experienced sharp rise in prices and the weak monsoon and deficient prospects for kharif production did not help matters. A comforting feature, however, was India had 44 million tonnes of foodgrains in godowns by September-end. The stocks included 15 million tonnes of rice.

Sacrifice

B. Babu Rao Varma, president of Burgula Ramakrishna Rao foundation committee which organised the lecture, praised the sacrifice of Ramakrishna Rao in giving up Chief Ministership of Hyderabad for the cause of a State for Telugu-speaking people.