New Delhi: Planning Commission Deputy Chairman Montek Singh Ahluwalia says he sees no imminent slowdown and the economy is very much on track for around 9 per cent growth.
Speaking on the growth prospects of the economy, he said recent data shows that the GDP growth has declined to 8.9. "I think these short-term variations don't affect the current year. We had based it on 8.5 per cent. The average for the first six months is above that. So I really don't see any case of worry," he said.
Ahluwalia was forthright in attacking the political parties, saying they were holding back the reform process. He tried to allay the fears of the business community that the reform process was on hold, stating that reforms have gone too deep to be reversed.
He assured them of the irreversibility and sustainability of the reform process and argued that the private sector will need to be a major contributor in the development of infrastructure sector.
"The Cabinet has just approved the 11th Five Year Plan which envisages an increase in infrastructure spending from five per cent of GDP to nine per cent. This would imply an investment of about $500 billion over a period of five years of which $150 billion need to come from private sectors," he said. Dr Ahluwalia was addressing a session at the India Economic Summit.
Dr Ahluwalia said this level of investment was essential to sustain a nine per cent or more GDP growth.
He said the committee on infrastructure, headed by the Prime Minister, had projected an infrastructure investment to the tune of $350 billion. The appreciating rupee has changed the calculations and the new estimates are that an investment of $500 billion will be required for the infrastructure sector.
Advocating more private sector investment, Ahluwalia said: "Investment in infrastructure in 2006-07 was five per cent of the GDP, which was inadequate." He argued that stepping up infrastructure investment by four percentage points will be a 'difficult task' and would require improvement in governance at the state level.
Ahluwalia was of the view that India need not emulate the Chinese model for raising its level of savings and investment. China saves 55 per cent of its GDP to effect an investment rate of 45 per cent. In India, the saving and investment is of the order of 35 per cent and 30 per cent respectively.
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