India unlikely to sustain high GDP growth: MP

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In an interview with CNBC-TV18, Rajeev Chandrasekhar, Member of Parliament, Rajya Sabha spoke about GDP figures and credit growth. Below is a verbatim transcript:

Q: What do you make of the 7.9% growth number? You have your finger on the pulse of the industry as well, do you think this is sustainable and we are going to have a shocker of a number in terms of GDP well over 7% this year?

A: I think we clearly expected higher GDP numbers on the back of this stimulus package and the considerable amount of liquidity in the system that the economy would reverse and the trend would be as we are seeing today. The challenges obviously are what you had alluded to about little earlier on the show which is that as we start trying to exit and moderate the quantum of more government spending and stimulus going forward given the concerns that the RBI has in terms of the asset bubbles and inflation. How sustainable would this revival prove to be? I think the focus is on the sustainability of this strength that we have to be focused on. I am not completely convinced that we are there yet because a large part of this is based on a smaller base a quarter ago and therefore we have got two serious couple of quarters back-to-back to arrive at the conclusion that we are on a sustainable path of an economic revival.

Q: Do you fear at all that inflation is going to get way out of hand? I am not asking you as a practicing economist but purely as someone who has observed both the political and the economic set up and the interlinkages for so long, we are going to see this base effect play into a very high inflation, we are seeing a huge amount of liquidity pushing up commodity prices at the same time, we have this chugging on personal consumption expenditure that is rising, is this going to be a serious cocktail that will push up inflation into an unmanageable level?

A: No, like I said I am not a practicing economist at all and I don't want to pretend to be one either but I think this is a concern and if you dice up these pieces, it is a concern that the whole problem of rising asset prices which caused some of the problems in last year is resurfacing because of the excess liquidity in the system, there is clearly a phenomenon that is political now, that is being debated in parliament and people are quite fired up about which is the increase in just the prices of food products and commodities. So all of this - even if you take pieces of it are issues of concern. The RBI has already made it known that they are quite concerned about the impact of this increased liquidity on potential inflation down the road. So I think these are the two challenges, one is that we have to make growth sustainable at the same time address these clearly visible signs that are making people in the RBI and other Central Banks concerned which is of inflation and rising asset prices.