Planning Commission Deputy Chairperson Montek Singh Ahluwalia on Tuesday said that India’s economic growth for 2008-09 would be six per cent and not seven percent as projected earlier but wanted the RBI to further cut rates.
Ahluwalia, who returned from a meeting of global bankers in Washington, blamed slowing down of manufacturing sector as a main cause for fall in the economic growth. In 2007-08, India’s economic growth was close to nine per cent.
To reverse the trend and provide impetus to the manufacturing sector, he said, the RBI can go for further reduction in the interest. “RBI always has more rooms for doing so as our rates are still on the higher side as compared to other countries,” Ahluwalia said.
Ahulwalia also strongly backed the RBI decision to put 10 billion dollars from the 250 billion reserves into buying International Monetary Funds (IMF) funds. “10 billion dollars can easily be put into IMF securities. We are doing this to support infra,” Ahulwalia said, indicated that worries about slowing down of infrastructure and banking operations continue to be a cause of concern.
He said the proposed buying of IMF bonds would be aimed at paving inflow of foreign investments in building India’s infrastructure, which is the cardinal aspect of the ruling UPA’s strategy to make India a favourite investment destination.