Indian economy to grow up to 7 pc in FY10: Plan panel

New Delhi, Mar 18 (PTI) The Indian economy is expected to
grow up to 7 percent in the next financial year riding on the
fiscal stimulus measures taken by the government, Planning
Commission Member Abhijit said Wednesday.

Even if the effects of the stimulus packages announced by
the government were not included, the economy would grow at 5
per cent in 2009-10 in a worst case scenario as per Planning
Commission calculations, Sen told reporters on the sidelines
of a CII summit here.

"We have done a worst case calculation on the basis of no
effect of the stimulus and what we know currently about the
world economy, on that basis the worst case scenario is about
5 per cent growth," he said.

Though Sen said the impact of any fiscal stimulus is
difficult to build in to numbers as "we are not very sure
about the pace at which it will take place", he projected the
stimulus effect to be between 1.5 per cent and 2 per cent.

"This will take the growth rate to between 6.5 and 7 per
cent," Sen said. However, on the impact of the stimulus, he
added, "It is an optimistic assessment."

On the possibility of the economy facing deflation, Sen
said, "I personally do not see any threat of generalised
deflation, though it might be in some sectors."

"Where WPI inflation is about 2.5 percent, CPI inflation
is roughly 11 per cent, and given that talking about inflation
is itself a bit problematic," he added.

Sen said the economy might require more fiscal stimulus,
but it would be possible only after the new government takes
charge. "We cannot provide any stimulus, at least on the
fiscal side, till the next government takes place."

On the issue of ministries asking permission from the
Election Commission to release important tenders, he said,
"Anything which impedes, because of procedures, government
spending will obviously mean that the stimulus will work more
slowly. Which is why I said that our two per cent is very
optimistic because it assumes that nothing comes in the way."

Regarding G-20 summit, Sen said there will be some
announcements but not much was expected.

"IMF will get more funds, I am entirely sure about that.
That may not be adequate in the assessment of some. I am sure
there will be something both on regulation and on IMF ... but
so far, I think the situation doesn't look that the G-20
meeting will shake the earth," he added. PTI MG
SAK