Pinning hope on government's resolve to get rid of impediments to growth, planning commission deputy chairman Montek Singh Ahluwalia on Sunday said the 6.5% economic growth projection for next fiscal is reasonable.
"... if you have taken corrective steps needed to get rid of
impediments to growth, projecting 6.5% is not too much ... The 6.5% economic growth, is not that unreasonable," Ahluwalia said in a CNN-IBN programme.
Commenting on whether whether the Budget is the right response to the challenge economy is facing, he said, "...the biggest challenge right now is huge micro imbalance, very large fiscal deficit that is mirrored in balance of payment by large current account deficit. Now, we want to get that in balance and not take the risk of running out of foreign inflows, this is important to reduce the fiscal deficit. That big message the budget does have."
On whether finance minister went for a big cut of around Rs. 92,000 crore in Plan expenditure to reduce the current financial year's fiscal deficit to 5.2% of GDP, he said this happened because of strict enforcement of rules by the finance minister.
"There are rules that say that only spend certain proportion of what you are going to spend in a year as a whole in the last three months. Using that (rules), basically what has happened is that slow expenditure in the nine months of year has lead to lower expenditure for the year as a whole," he said.
"But the important thing is that in the last year, there was a big increase because we want to give good start to the 12th Plan. The fact is that the ministries took too long to get the act together."
About the doubts that lesser Plan expenditure would hurt growth prospects, he suggested that economic growth will not depend only on government spending and by "the restraint on government expenditure has to be offset by big increase in private investment and public sector investment which is not in the budget. If that happens, the growth will take place."
He said the fiscal deficit target of 4.8% of the GDP next fiscal was "achievable".
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