Indian economy may grow at 7 percent next fiscal: Rangarajan

Last Updated: Tue, Feb 12, 2013 14:00 hrs

New Delhi, Feb 12 (IANS) India's economic growth is likely to rebound to 6.5-7 percent in the financial year beginning April 1, 2013 and over 8 percent in the subsequent years, chairman of the Prime Minister's economic advisory council C. Rangarajan said Tuesday.

Rangarajan admitted that despite India's fast recovery from the global financial crisis, investment trade did come down, "but that was not much to justify" the current growth rate.

He said the incremental capital output ratio rose because of problems in the availability of raw materials in the power sector -- like coal and gas.

According to data released by the Central Statistics Office (CSO) last week, India's GDP growth is likely to slump to 5 percent in the current financial year, the weakest in a decade, due to poor performance of manufacturing and services sectors.

"Once we fix problems in the availability of raw materials, the growth rate will pick up," said Rangarajan, who is also a former governor of the Reserve Bank of India (RBI).

dhe was addressing an event organised by Observer Research Foundation here.

Underlining that growth is very important to find resources to fund programmes meant for poor, Rangarajan stressed the need for having the appropriate balance between regulation and innovation.

"We should not draw wrong lessons from the financial crisis. While regulation is important, innovation is also important. We should strike an appropriate balance between regulation and innovation," he said.

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