Bangalore: RBI Governor Bimal Jalan on December 27 asserted that India can achieve
the eight per cent growth target fixed for the 10th plan (2002-07), saying conditions
are right and the country's current macro-economic situation has seldom been better
than now.
Inaugurating the 24th Bank Economists' Conference (BECON-2002), Jalan dismissed
cynicism expressed in certain quarters regarding the target and said he would like to
state
unequivocally that India can achieve it.
He said inflation at around three to 3.15 per cent is low despite one of the worst
droughts, while the country has no balance of payment problem, foreign exchange
reserve is high
and external debt has not increased.
However, Jalan strongly called for increased productivity, saying low productivity in
India is a matter of grave concern and decried the tendency of Indians of being
tolerant towards inefficiency.
"We spend a lot and gain relatively little", he remarked. "Low production is the core
problem. We are spending without sufficient returns. We have to increase the volume
of output".
Stating that the Indian economy has recently been exhibiting signs of staying ahead
of global activity, he said some signs of cyclical recovery are currently evident,
although border tensions, a relatively weak and uneven monsoon and concerns relating
to the fiscal position are downside risks restraining a fuller surge of
growth.
"Real GDP (gross domestic product) in agriculture could decline by about 1.5 per cent
for the year as a whole, reflecting mainly the anticipated shortfall in food grains
production," he said, adding, industrial performance in the first half of the year
appears to have shrugged off the sluggishness experienced in the previous year.
Stating that all constituent sectors of industry have recorded improvement in growth,
led by manufacturing, Jalan said that significantly, the production of the
infrastructure industries and capital goods growth has also revived.
Export growth, he noted, has turned out to be robust in the first half of the year,
while non-oil imports have risen over last year's level suggesting that the
slackening of domestic demand seems to be flattening out.
Given these lead indicators, real GDP growth of five to 5.5 per cent during 2002-03
appears feasible, he said.
Maintaining that inflation outlook is uncertain with international oil prices
volatile with perceptions of war risk, and with domestic oilseeds and edible oil
prices rising, Jalan said for the year as a whole, inflation is expected to remain
within four per cent in the current year.
PTI
