GDP to grow at 7%

In spite of the slowdown across sectors and shrinkage of industrial output by 0.5 per cent, the Indian government feels that the GDP would grow at a rate of seven per cent during this fiscal.
Dr Saumitra Chaudhuri, member of the Prime Minister’s economic advisory council, said: “In comparison with November and December 2008, the economic conditions have started improving since January 2009, and we can achieve the growth rate of about seven per cent.” If the global recession continues for the next two to three years, then deceleration on the domestic front would be possible, he added.
While speaking at a conference organised by the Indian Merchants’ Chamber on Friday, March 13, 2009, Mr Chaudhuri said: “The positive impact of the stimulus packages announced by the government in January 2009 would be evident in the next few months.
Although, the economy has slowed down, we will back on the growth path soon. The reduction in interest rates have yet not translated into cheap lending for corporate houses.
Banks are not lending to them and foreign resources have dried up.” Surely, it was a cause of worry, he added. Corporate houses are facing a severe credit crunch as all resources have dried up. Elaborating this point,
Mr Siddharth Roy, economic advisor of the Tata Group said: “Corporate houses avail two-thirds of their funding from external sources. But sources like ADR, GDR, commercial papers and capital markets have completely dried up.”
He added, “It is said that Indian domestic savings are as high as 38 per cent of GDP, but out of this 80 per cent savings are for the short-term and only 20 per cent savings are from a long-term perspective.”
Source: DC