The government last month lowered the GDP growth forecast for the current financial year to 7-7.5%, mainly due to deficit rains that have led to lower farm output.
The economic growth is likely to be below 7% in 2015-16 fiscal as against the NDA government's latest forecast of 7.1%, former Finance Minister P Chidambaram said on Saturday.
"You (government) began the year promising 8.5% growth (for 2015-16), you are ending the year, hoping that you will get 7.1% growth. Let me take the risk of making a prediction, my sense is that in 2015-16, you may not even get growth of 7%. Growth will go below 7%," Chidambaram said while addressing students of Shri Ram College of Commerce here.
The government last month lowered the GDP growth forecast for the current financial year to 7-7.5%, mainly due to deficit rains that have led to lower farm output.
Highlighting recent IIP and exports data, Chidambaram said that for 13 successive months, exports have registered negative growth. In 24 sectors making up industry, 17 sectors registered negative growth in the month of November. Capital goods sector has declined 24% in the month of November.
Consumer growth is registering negative growth. Key industries of steel, cement, oil and gas have registered negative growth, he added.
Referring to the recent debate on India becoming the fastest growing major economy, outpacing China, Chidambaram said, "Remember China grew at an average of 10% or more for 30 years which is why China and India which were more or less at par in 1980, today size of China's economy is 3 times size of India's economy ... there is no point in saying our growth has outpaced China."
"By the same argument you can also say our growth has outpaced USA ... it does not mean Indian people are more prosperous than America, it does not make Indian economy stronger than America. We have to look at size of the economy," the senior Congress leader said.
Helped by a pick up in manufacturing, India's economy grew by 7.4% in the July-September quarter of current fiscal, outpacing China in percentage terms to become the fastest growing major economy.
He noted that today government faces a new crisis, the China crisis, and suddenly collapse of China's growth rate will affect India's exports.
Chidambaram said the government must stick to path of fiscal prudence, adding, "India must grow at an average of 8% a year for the next 10, 20, 30 years." He also said that expenditure in rural India has come down sharply and there is acute distress in real India.
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