Rangarajan pegs economic growth around 8.5%

The economy is likely to grow around 8.5 per cent in the current fiscal if the country gets a normal monsoon, Prime Minister's economic advisory council chairman C Rangarajan said on Friday.

Rangarajan further said the growth in the manufacturing sector is likely to be over 10 per cent this fiscal. "One could expect the average rate of growth achieved during 2009-10 to be achieved this year also," he said.

The manufacturing sector grew by 16.3 per cent in the fourth quarter of FY10 against 10.8 per cent in the year-ago period.

He further said the 7.4 per cent growth rate for 2009-10 indicates that growth is strong and the impact of drought on farm output has been much less than what was originally anticipated.

The Met Department has said the country could experience good monsoon this season after a year of drought. "Overall we expect good monsoon this year," Met Department director general Ajit Tyagi had said earlier this week.

However, chief statistician Pronab Sen has said it may be difficult to achieve an 8.5 per cent economic growth this fiscal as many uncertainties persist. "Investments have gone fast, but we have question marks about its sustainability. Credit is growing but not in a way that it would support an 8.5 per cent GDP acceleration. I think there are still uncertainties and question marks," Sen had added.

Prime Minister Manmohan Singh and finance minister Pranab Mukherjee had also pegged GDP growth at 8.5 per cent for the current fiscal.

The economy grew by 7.4 per cent last fiscal, better than 7.2 per cent as calculated by the CSO in its advance estimates. Following the global financial crisis, the GDP growth slipped to 6.7 per cent in 2008-09 from over 9 per cent in three preceding years.