India will see another 'harsh' year in 2013: Kaushik Basu

Dec 14 2012, 22:04 IST
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World Bank Chief Economist Kaushik Basu. World Bank Chief Economist Kaushik Basu.
SummaryWorld Bank Chief Economist Kaushik Basu says more India will face more economic pain.

India will see another "harsh" year in terms of economic growth in 2013 as the European situation "will remain very difficult up to end of 2014", World Bank Chief Economist Kaushik Basu today said.

"Next year will also be very harsh (for India)...the European situation will remain very difficult up to end of 2014 and may be to the beginning of 2015.

"And Europe is a very major player, so that is going to rub off on India. The growth scenario will be difficult," Basu told reporters on the sidelines of Delhi Economic Conclave here.

However, Basu, who from December 2009 to July 2012 served as the Chief Economic Advisor to the Government of India, said the country in next two years may get back to the 8-9 per cent growth rate at which the economy was expanding before the 2008 global economic crisis.

"Give India two-three years. India has enough fundamental strength that if you work towards these, then really there is no reason why India can't get back to 8-9 per cent growth," Basu said.

It would be good if India could bounce back to 6-7 per cent growth in this difficult situation, he added.

"...the global climate is tough so its not going to happen that we will bounce back to the 9 per cent growth that we had before 2008. But we should be able to buck the global trend and have India move up with the reforms and few more."

The World Bank has projected growth of about 5.5 per cent for the calendar year 2012 for India and below 6 per cent for 2013, Basu said.

However, for 2014 and 2015, the World Bank has projected economic growth close to about 7 per cent.

On inflation, he said it is a good sign that core inflation is beginning to trend down.

Hailing the recent slew of measures taken by the government for economic reforms, Basu said India should buck the global weak trend even tough the global climate continues to be tough.

He said reforms measures, including direct cash transfer, will help the poor and the vulnerable section of the society the most.

"For India that (poor) is the bigger concern for growth. Aadhaar enabled direct cash transfer can help the poor and vulnerable very directly," he added.

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