7% GDP growth feasible: Montek Singh Ahluwalia

Montek Singh Ahluwalia, Deputy Chairman, Planning Commission, said 7% GDP growth was getting tougher. He did not believe that anything that happened in the last month or so either about the world economy or about the domestic economy would question the prospects of 7%. “But something like 7% is feasible,” he added.

Here is a verbatim transcript of the exclusive interview with Montek Singh Ahluwalia on CNBC-TV18. Also watch the accompanying video.

Q: Before I get really long-term, the immediate or the shorter-term problem is becoming the monsoon. What is the thinking in the Planning Commission? Are you so worried that you may have to start trimming some Kharif expectations already?

A: No, I don’t think that would be really alarmist. It is true that the monsoon has been a little delayed – I am happy as we are talking that it is raining in Mumbai. So a one to two-week delay of the monsoon doesn’t necessarily mean that there will be a serious loss. I mean in many parts of the country now have irrigation possibilities and I think a two-week delay in the monsoon can easily be made up. Also a lot depends not just on how the monsoons start but how it progresses. So I am sure that the Agriculture Ministry is looking to see whether we should be ready to handle a situation where the dry spell becomes longer than necessary. But it is far too early to start saying there is a problem.

Q: Is it early enough to start questioning our growth targets? For the past eight weeks or twelve weeks everywhere around the world we heard this theory of green shoots but now that’s getting questioned. The World Bank has come with a more dire forecast than it had made initially although it has upped the Indian forecast a bit. Would you worry that the problem in FY10 is going to be more serious than most of us have budgeted for? Do you think 7% is looking distantly tough?

A: No, I wouldn’t say that. I think it is tough, it always was tough. But I don’t believe that anything that has happened in the last month or so either about the world economy or about the domestic economy would make us question the prospects of 7%. Short-term forecasting does involve ranges and many people who think 7% is too high, some of my own colleagues think we could do 7.5%. So 7% is not the highest number that I have seen but I think for myself and we have to wait and see on what numbers the Finance Ministry will spin out its Budget. But I think something like 7% is feasible.

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