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'Without reform, growth will fall below 6%'

business Updated: Aug 09, 2012 11:51 IST
Planning Commission

A Planning Commission committee has cautioned that economic growth will slip below 6% in the absence of reforms by the government.

"Without reform, growth (is) likely to grind to less that 6 per cent per annum," said the National Transport Development Policy Committee Working Group on Transport of Bulk Energy and Key Commodities in its report to the Plan panel.

It said the government would need to step up reforms in investment planning, incentive regime and strengthen regulators if it wants the economy to grow at 8-9%.

The group, headed by Nasscom chief economist Anupam Khanna, pointed out that there was a risk of stranded assets and financial hits in both private and public sectors.

"Electricity consumption is presently supply constrained, at least at current prices, cost of delivering electricity likely significantly higher, renewables and energy efficiency deserve greater emphasis," the report said.

The economic growth rate slowed to a nine-year low, both in the March quarter at 5.3% as well as in 2011-12 at 6.5%.

Several agencies and forecasters have also scaled down expectations of growth prospects on back of high inflation and deficient monsoon.

Planning Commission deputy chairman Montek Singh Ahluwalia has said deficient monsoon was likely to pull down the economic growth in the current fiscal to about 6%, from 6.5% a year ago.

External agencies also see moderation in growth ahead, with the International Monetary Fund (IMF) placing GDP at 6.1% this calendar year, World Bank seeing 6.9% for the fiscal, OECD at 7.3%, and ADB at 6.5%.

Also, a study of professional forecasters done by RBI revealed that growth would slip to 6.5% for the fiscal against RBI's projection of 7.3%.

The RBI in its recent monetary policy has refrained from reducing key policy rates despite concerns of economic slowdown and demands from industry.