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RBI's growth forecast realistic: Manmohan

May 18, 2004 15:04 IST
Last Updated: May 18, 2004 15:42 IST

Terming the 8.1 per cent growth in 2003-04 as "inflated", Congress on Tuesday said the Resrve Bank of India forecast of 6.5-7 per cent for the current year was "realistic".

The Monetary and Credit Policy 2004-2005

"I think 6.5-7 per cent growth projections by RBI in its slack season Credit Policy unveiled today is realistic," senior Congress leader Manmohan Singh told reporters.

The 8.1 per cent growth last financial year was inflated due to steep increase in agriculture production after a very severe drought in the previous year and "that cannot form a basis for a conclusion that we are now on a trend growth rate of eight per cent."

"So the over 8 per cent growth is certainly an aberration," he said declining to comment on the RBI decision to keep the bank rate unchanged at six per cent saying he was yet to go through the Credit Policy.

Asked whether it would be difficult to achieve average annual growth rate of eight per cent during the Tenth Plan period, Manmohan Singh said, "I won't say it is impossible... India can achieve much higher growth rate."

"We have to work towards that goal, we need to design our policies to promote savings, investments and competitiveness," he said.

He said controlling inflation was a "national priority" and therefore "we will have to watch the price trends as rising prices have a bearing on inflation rates."

To a question on the decision of the Congress government to supply free power to farmers, Singh said the general approach was that there should be user charges.

Regarding the specific problem of farmers in Andhra Pradesh, Singh said the farmers in the state have had a "raw deal" for many years because of drought and other policy variables.

Therefore, he said, "I think some amount of comfort was necessary but that does not mean there should be no user charges."

Regarding the Common Minimum Programme, Singh said the draft was ready but he and other senior colleagues of the party have not had the time to discuss it with the party allies.

On lifting sectoral caps on foreign direct investment and abolition of POTA as demanded by its Tamil Nadu allies, Singh said his government would do whatever was necessary in the national interest.

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