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6.5% growth difficult, says Manmohan Singh

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Prime minister Manmohan Singh on Friday said the country will see lower GDP growth than the projected 6.5% in the current financial year. He, however, asserted that the current account deficit (CAD) will be lower than last year’s 4.7%.

Even as he expressed hope that the recent measures taken by the government on relaxing the FDI regime, gas pricing and infrastructure push will bring growth in the second half of the current fiscal, Singh cautioned about growth.

“I wouldn’t like to make a forecast of what our growth will be in 2013-14. The IMF has reduced its earlier projection of growth rates for all countries, including India, for 2013. We had targeted 6.5% growth while presenting the Budget. But it looks as if it will be lower than that,” Singh said while addressing the ASSOCHAM annual general meeting here.

Earlier this week, finance minister P Chidambaram had said the country will see a growth of over 6% in the current fiscal, over 7% in 2014-15 and above 8% in the year after that. In fact the Economic Survey, tabled in Parliament in February, projected a growth range of 6.2-6.7% for the current fiscal.

The widening CAD, the depreciating rupee, a high interest rate regime and the subsequent lower industrial output have since then made the targeted growth rate recede. Global agencies too have lowered India’s growth projections for the current fiscal; the International Monetary Fund (IMF) has lowered the country’s growth forecast to 5.6%, while the Asian Development Bank has pegged it at 5.8% for the current fiscal.

“I can assure you, we are committed to bringing the current account deficit under control by addressing both the demand and supply sides of the problem,” Singh said. “Ideally, we should bring the current account deficit down to 2.5% of our GDP. It is clearly not possible to do this in one year, but I expect that the CAD in 2013-14 will be much lower than the 4.7% recorded last year. It will decline further next year. We will use all policy instruments available — fiscal, monetary and supply side interventions to ensure that the CAD declines further over time.”

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