India’s growth rate is expected to be between 5 and 5.5%, C Rangarajan, chairman of Prime Minister’s Economic Advisory Council (PMEAC), said on Thursday even as the World Bank and the International Monetary Fund (IMF) recently lowered their growth forecast for the country to less than 5% in the current financial year.
While World Bank lowered its growth projection for India to 4.7% from 6.1% made earlier, IMF in its World Economic Outlook said it would be 3.75% this fiscal.
“These institutions are unduly pessimistic. We think the growth rate will be between 5 and 5.5%. We have projected a growth rate of 5% earlier, which I think still holds,” Rangarajan told reporters on the sidelines of the global conference on financial inclusion and payment systems in New Delhi.
Though PMEAC too lowered its growth projection for India to 5.3% last month from 6.4% made earlier, it was higher than projections by most other agencies.
He said the growth in the agriculture sector would be “extremely good”. “Monsoon has been extremely good …this will result in pickup in rural demand,” he said, adding that the manufacturing sector would show “definite improvement” in the second half of the current financial year.
Rangarajan pointed out that exports showed healthy growth in August and September, which would also have an impact on domestic production.
“In August and September, export growth rate was in double digits …That will also have an impact on domestic production,” he added.
On high onion prices, Rangarajan said they were due to supply constraints and that it would only have a temporary impact on inflation.