Expect H2 GDP growth to be better than 5.4% in H1: Montek

Even as macro-economic indicators are yet to show definite signs of improvement, deputy chairman of Planning Commission, Montek Singh Ahluwalia says there is evidence that the economy may have bottomed out. In an interview to CNBC-TV18, Ahluwalia said that GDP growth in the second half of the fiscal would be 'better' than the 5.4 percent logged in the first half.

The improvement, he says, will be a gradual one, with the growth accelerating only next year. He says the government is doing its bit by accelerating the progress of projects where clearances are not an issue. The proposed National Infrastructure Board (NIB) will strive to make clearances easier for large projects, he said. On the matter of cash transfer, Ahluwalia said the programme will be implemented from January 1, 2013 in a gradual manner. Also Read: Brace for 21000, don't wait for correction: Ramesh Damani On 2G spectrum auction, he said that the government would go ahead with the auction, though it may now opt for a descending price auction or reduce the base price. A descending price auction, also known as a Dutch auction, is one where auctioneer begins with a high asking price which is lowered until a participant is willing to accept the auctioneer's price or a predetermined reserve price (the seller's minimum acceptable price) is reached. The winning participant pays the last announced price. Below is an edited transcript of the interview on CNBC-TV18. Q: Is there adequate evidence to justify that come 2013, the growth in the economy will start accelerating? A: When I said in October that the economy has bottomed out, I didn’t mean that it was now about to rebound. It just meant that I didn’t think it was going to get worse. The evidence does suggest that there is a bottoming-out and that maybe, in the second half of the current fiscal year, the economy may perform better than in the first half. Now in the first half, the economy posted a GDP growth of about 5.4 percent and it is quite likely that the economy will do better than that in the second-half. But I don’t see evidence of a very strong revival yet. That probably will have to wait until 2013. A lot of initiatives that have been taken and are being planned invariably will take time before they are translated into industrial decisions. But I think the government has got its  eye on the ball and if what is currently being discussed is implemented, then 2013 will certainly be a lot better than 2012. Q: On that count, there was some disappointment on Thursday that no headway had been made on the National Investment Board (NIB)... A: Yesterday an exceptional day, the debate in the Rajya Sabha went on longer than expected. I certainly hope that the NIB receives actual approval because when it is established, it will make a huge difference in the way projects get processed and cleared. So the fact that it wasn’t cleared yesterday does not mean that it is not going to be cleared. There was very little time and there were many issues on the agenda. Since this is a significant issue, I am not surprised that it was decided to conduct a discussion on it at an occasion which afforded more to time to consider a wider opinion. Q: A few experts have pointed out that even if the NIB were to come through, the required legislation and establishment of the enabling framework may cause the NIB to help the investment cycle eight-to-ten months later. In the interim, does the government have any plan to stimulate investments? A: There are a number of projects in which the government has directly taken the initiative for example the acceleration of the work on the dedicated railway-freight corridor. But my feeling is that the perception that the government is now putting in place mechanisms that will avoid frivolous objections to projects, will reassure investors to go ahead and invest. My opinion is that the sum total of signals that have been given will make a number of parties engaged in ongoing projects take a leap of faith and implement their investment and expansion plans as quickly possible. Q: Once the Winter Session is over, do you expect to make any headway in implementing the diesel-price increases and is the process on track to launch the cash transfer mechanism on January 1? A: I don’t have any knowledge about what's going to happen in very short run on fuel prices. The cash transfer is very much a program which is in the pipeline. A mechanism has been established to actually ensure that implementation of the cash transfer will begin starting from the January 1. My expectation is that the preparatory work that is needed to do this will get done and the first set of cash transfers will happen during the month of January.
Now I should emphasise that there are two kinds of cash transfers. There are transfers which actually were being done anywhere through various cheques and bank accounts but they were not based on using the ‘Aadhar’ platform. So in the first instance it is those transfers that will be converted to an electronic transfer using the ‘Adhar’ platform and that will demonstrate a huge amount of efficiency and reduction in misdirected transfers. Once the glitches in the system have been worked out, bringing the other subsidy transfers would actually be quite easy and I would hope that in the switch from subsidy, subsidised products being provided to a direct cash transfer, it is really the LPG that will be the first one off the block. Now somewhere in the next few months we should be able to do quite a lot on that but I don’t have an actual timeline. In January, we will, I am sure, in the 51 districts that we have identified, demonstrate that an Aadhar-enabled system allowing cash transfers to go directly to bank accounts that are linked to Aadhar, this will actually take place. And that is a very important proving ground for what could be a game-changer and how subsidies are managed in the coming year.