Global meltdown to chop off 1.5-2.5 pc of GDP, say experts

New Delhi, Nov 8 (PTI) The global financial meltdown can
wipe out India's economic growth by 1.5-2.5 percent in the
next two years, as per the projections of various economic
think-tanks before the Planning Commission.

"There is a lot of uncertainty but compared to the base
run, growth can be between 1.5-2.5 percent lower," Planning
Commission Deputy Chairman Montek Singh Ahluwalia told
reporters while referring to the presentations made by four
leading economic think-tanks before the Plan panel Saturday.

Ahluwalia further said although the country faces "a
difficult time for the next two years", it can minimise the
impact "as much as we can by looking at contra-cyclical
policies".

He added that by the time the world recovers in the third
year, India will be back on the trajectory of growth projected
earlier.

India's ability to grow at a high rate is not affected,
he said, but may be lower than what was projected in the 11th
Five Year Plan.

According to the projections by Delhi-based N.C.A.E.R.,
the G.D.P. growth rate during 2008-09 could slip to 6.2 to 6.7
percent depending upon the impact of the metldown and the
steps taken by the government to neutralise it. It further
said the growth would increase 7.4-7.5 percent in 2009-10.

The Institute of Economic Growth (I.E.G.) said the 11th
Plan growth rate could fall to as low as 5.3 percent from an
average of 8.38 percent envisaged in the document. On the
higher side, the average growth rate during the plan period
could be 8.05 percent, it added.

In addition, the presentations were made by the Indira
Gandhi Institute of Development Research, Mumbai, and Indian
Statistical Institute, Bangalore.

In its presentation before the Plan Panel, N.C.A.E.R.
lowered the economic growth forecast to 7.6 percent from 7.8
per cent projected earlier in July.

Montek said the general conclusion from the presentations
made by various institutes is that "it is very clear that if
you have the kind of negative outcome in the global economic
situation (as you have at present), it will have a negative
impact on India".

Planning Commission member Kirit Parikh said the
government should take counter-cyclical measures in the form
of fiscal measures, like spending more money in
infrastructure, which would increase the productivity of the
economy.

He said they are in talks withn talks with various
ministries on what measures should be taken to mitigate the
negative affects of the crisis.