GDP at 7% if monsoon does not fail: PMEAC

Written by Press Trust of India | New Delhi | Updated: Jul 1 2009, 04:43am hrs
The chairman of PM's Economic Advisory Council, Suresh Tendulkar, said on Monday the economy would expand by at least 7% during the current fiscal provided the monsoon does not fail.

He ruled out the need for pressing the panic button at the moment.

Talking to news persons on the sidelines of a function to observe the third Statistics Day here, Tendulkar said, If the monsoon does not fail, the economy will grow by at least 7%(during 2009-10).

Asked about the impact of delayed monsoon on agriculture and the economy, Tendulkar said, it is too early to press the panic button. Rainfall, according to latest official estimates, is likely to be only 93% of the long-period average.

As regards inflation, Tendulkar said, it is likely to remain between five and six per cent by the end of current financial year.

The Wholesale Price Index would still be under 5-6 %, if monsoon are all right. If monsoon fails, it will be little more, he added. Tendulkar also expressed the confidence that the economy, which has been reeling under the impact of the global financial meltdown, will recover by September.

Having grown by about 9 % continuously for three years, the growth rate slipped to 6.7% during 2008-09 on account of the global financial meltdown.

Noting that high interest rate was a matter of concern, Tendulkar said, it might not be possible for banks to lower the lending rates in absence of commensurate reduction in deposit rates.

However, Tendulkar added RBI's policy rate cuts was getting reflected on the lending rates of the banks.

The country's largest lender State Bank of India (SBI) recently reduced its Benchmark Prime Lending Rate (BPLR) by 50 basis points to 11.75%.