Overall growth rate of 4.9% still possible: Rangarajan

Dr. C Rangarajan, Chairman of the Economic Advisory Council to the Prime Minister had expected the third quarter growth rate to come in higher than 4.7 percent. Despite the setback, he feels an overall growth rate of 4.9 percent is still possible. The Indian economy grew 4.7 per cent in the third quarter of this financial year mainly due to improved performance in the agriculture and services sectors. The country's gross domestic product (GDP) had expanded 4.8 per cent in the July-September quarter and 4.4 per cent in April-June. Growth in the first nine months (April-December) was 4.6 per cent compared with 4.5 per cent in the same period a year ago. The economy had expanded 4.4 per cent in the third quarter of 2012-13, according to official data released today by the Central Statistics Office (CSO).Given the performance in the first nine months and GDP growth of 4.9 per cent projected by the CSO in its advance estimates for this financial year, the economy must expand 5.7 per cent in the fourth quarter ending March.

Below is the transcript of Rangarajan’s interview to CNBC-TV18's Latha Venkatesh and Ekta Batra Latha: The GDP number is a shade lower than what people were expecting. Are you getting a sense that we will be able to do over 5 percent in the current quarter?A: I had thought that the growth rate would be slightly higher, but it has now turned out to be 4.7 percent for the Q3. All the same, I believe that the overall growth rate for the economy for the year can be 4.9 percent. This of course would require substantial pickup in the growth rate in Q4 but that will come I believe from substantial increase in agriculture and some positive growth in manufacturing. In the last quarter, you also get a pickup in community, social and personal services. As far as financing real estate and business services are concerned, even the Q3 has shown a big growth of 12.5 percent. Therefore, if this is continued into Q4, I believe that the overall growth rate of 4.9 percent, which is the advance estimate of CSO, can still come out to be correct.Ekta: For that, GDP should come in at 5.7 percent in Q4. Despite the fact that, maybe we could see a pick up in next quarter, do you think it would be as much as 5.7 percent?A: Your calculation is correct that the fourth quarter growth rate will have to be 5.7 percent in order to get you the overall growth rate of 4.9 percent. This will come as I just now mentioned from the substantial improvement in agriculture after all the first three quarters have given you only about around 4 percent or little below 4 percent. Therefore, everybody is expecting for the year as a whole a substantially higher figure and therefore the growth rate in agriculture in fourth quarter can be very substantial. As I mentioned, in the case of manufacturing too, it will have to be positive. So far it has been negative. The three quarters taken together is negative. Overall growth rate is negative; you will not have a positive growth rate in manufacturing. I believe it is possible.