Expect 8% growth in 2-3 years: Montek

Expecting a better economic growth rate in the second half of current fiscal, Planning Commission Deputy Chairman Montek Singh Ahluwalia said on Thursday gross domestic product expansion is likely to improve to 8 per cent in the next two to three years from below 6 per cent at the moment.

"India is growing just below 6 per cent at the moment and the government hopes to take it to 8 per cent over a two-to-three year period which is not an unreasonable expectation," he said in an interview to private news channel CNBC-TV18.

Terming HSBC's projection at 5.2 per cent for the current fiscal as incorrect, Ahluwalia said the second half is likely to be better than the first half's.

HSBC has recently lowered India's growth forecast for 2012-13 to 5.2 per cent from 5.7 per cent projected earlier, and for the next fiscal to 6.2 per cent from 6.9 per cent.

"HSBC probably got it wrong...I do not expect a further deceleration of GDP growth.

"In the first half of the year, GDP growth was around 5.4 per cent.

"My expectation is that in the second half of the year, when the data comes in GDP growth will be higher than 5.4 per cent. HSBC forecast is excessively pessimistic", he said.

On likelihood of increase in diesel prices, he said, "I am not speculating on what government might do in the next week or two.

"That is something the ministry of petroleum has to decide . . . Some graduated adjustment is necessary but exactly when and by how much, is really left to the discretion of the oil ministry."

The 12th Plan document, he added, had made it clear that it was essential to align domestic fuel prices with global prices as the under-recovery on petroleum was very large.

As regards the widening Current Account Deficit, Ahluwalia said it should be brought down to about 3 per cent in the next few years and 2 per cent by 2016-17, the last year of the 12th Plan.

According to latest figures, CAD, which is difference between exports and imports after taking into account remittances and other payments, was 5.4 per cent in July-September quarter of 2012-13.

The government, he hoped, would take steps to deal with the situation in the forthcoming budget as "it is not unwilling to take difficult decisions.

The government has already taken several of them."

Regretting that the National Highways Authority of India has not been able to award projects according to the plan, Ahluwalia said the commission is looking at ways to speed up the process.

". . . it is quite clear that the manner in which the clearances are issued needs to be streamlined and transparent.

"So, the Planning Commission is in consultation with the Environment Ministry, and the Cabinet Committee on Investment needs to holistically study the problem and address it," he said.

He further said that the government has notified the formation of the CCI and hoped that ministries would soon come up with proposals to expedite implementation of mega projects which are stuck up for some reason or the other.

The commission, Ahluwalia said, would be submitting its report on lack of fuel linkages to the Prime Minister within a week or 10 days.

"If the review reveals that some of these bottlenecks could be resolved by the CCI, I will send a note to the committee. "I am very confident that over the next month or so, the Cabinet Committee will actually have on its agenda a long list of proposals to resolve certain problems", he said.

With regard to coal shortages being faced by power plants, he said, the pace of setting up generation plants has suddenly caused a huge demand on coal which the CIL has not been able to meet.

The solution lies in importing coal and that is possible, but imported coal is much more expensive, he added.

The whole issue, he said, was linked to energy pricing and the markets are not ready to absorb those imports at higher prices.

"The solution to that is price pooling and that proposal is under consideration. I am not sure why it has been delayed, may be there are different points of view but that's one of the issues that the CCI could take a call on", he added.

Image: Montek Singh Ahluwalia