Expect GDP to hover between 5.5%-6% in FY13: Rangarajan

C Rangarajan, chairman, PMEAC, says that the GDP numbers would pick up in the second half. He expects GDP to hover around 5.5-6 percent in FY13.

Also read: GDP slows down to 5.3% in Jul-Sept

Below is the edited transcript of his interview to CNBC-TV18.

Q: Does GDP at 5.3 percent giving you an impression that the worst is not over and we could get an even lower number in the second half?

A: GDP numbers would pick up in the second half. There is no reason for the growth rate to decline in the second half. We expect the GDP to pick up in the second half; we know what is happening in agriculture but saw a sharp decline in the manufacturing sector last year in the second half. That is where we will have the benefit as a lower base therefore there is no reason to believe that the growth rates in the second half can be lower than the first half.

Given the first half numbers and the expectations in Q3 and Q4, we should be able to achieve a growth rate between 5.5 percent or a little above that during FY13 as a whole. The range of second quarter is always small compared to the first half.

Q: You think you would be able to tick up to 6 percent at all, will it be maybe marginally better, may be we could do for the 5.6 percent or similar for full year?

A: It should be between 5.5-6 percent. How far we get above 5.5 percent will depend upon on the recovery. In order to achieve 6 percent GDP growth, we need to have very strong growth in the second half because the first half is nearly half a percent below that.

Q: What is your estimate that monetary policy should do now? Q2 has been worse than Q1 and we had a mildly lower inflation number 7.45 percent against 7.8 percent in the month of September, how does all this stack up in terms of what monetary policy should concentrate on?

A: We watch out one more release of the price index before the decision has to be taken. Therefore, it will virtually depend upon what wholesale price index will show. Last month we saw a small decline, if it continues then there will be some scope. Therefore virtually everything depends upon what the price numbers will show in another three weeks.

Q: What are you estimate for FY14, if you think that we could finish off FY14 by at around 5.5-6 percent, would it be a further pick up in FY14 or would we stabilize at those levels?

A: Next year would be 1 percent higher than current fiscal. I think there will be reversal of investment sentiment that we had seen in the several quarters and any reversal in the sentiment. It takes time for reaction to materialise.

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