India confident of 8% GDP growth

An 8 per cent GDP growth rate with inflation within the Reserve Bank of India's projection of 5-5.5 per cent is possible for the current fiscal, according to Chief Economic Advisor Ashok Lahiri.

However, he has admitted that expenditure is under pressure and poor performance of the mining and electricity sectors and poor infrastructure are coming in the way of sustaining an even higher manufacturing growth.

"Expenditure is under pressure. Though revenue is doing well, we have to be careful. Given the government's commitment to the Fiscal Responsibility and Budget Management Act, it is highly desirable that we meet the fiscal deficit target. There is a need for moderation between popular demand and exorbitant promises," he said on Monday.

"I think the growth rate should stabilise between 8-10 per cent. For the current year, I will be disappointed if it does not grow by at least 8 per cent," he said.

Lahiri said in the coming months, issues like subsidy reforms, which is mandated in the UPA government's National Common Minimum Programme, would have to be addressed.

Asked whether the oil bonds and the Rs 16,000-crore Food Corporation of India bonds would not increase the fiscal deficit, he said, "The FRBM allows a contingent liability of 0.5 per cent of the GDP. These bonds have to be considered under that head."

He said the pressure on domestic interest rates would ease if the US Federal Reserve continued its pause on interest rate hike.

"There is a clear linkage between domestic rates and international rates. The thinking in the US is that the worst inflationary pressure is over, so if Fed presses a serious pause button, pressure on India will also be less," he said.

On inflation, he admitted that the prices of some essential commodities and primary food articles were causing a slight upward pressure on inflation.

"The present stock of foodgrains, particularly wheat, is however comfortable. We don't have to be alarmed and the present stock management policy is expected to continue," he said.

He added that prices of pulses particularly urad and moong were expected to rationalise further with their crops entering the market in the coming kharif season.