Economy to grow by 6.5 per cent in current fiscal: Montek

New Delhi, Mar 24 (PTI) India's Planning Commission
Tuesday said the economy will grow by 6.5 per cent during the
current fiscal, much below the 7.1 per cent projected by the
government last month.

"Growth this year will be around 6.5 per cent and the
name of the game next year will be to repeat that
performance," Planning Commission Deputy Chairman Montek Singh
Ahluwalia said here.

Pointing out that additional stimulus, over and above
what was announced in the Interim Budget, would be required to
push growth, he said, "it will be a major achievement (to
achieve growth of 6.5 per cent in 2009-10)".

Ruling out the possibility of sustained inflation in the
backdrop of steps being taken by the Reserve Bank and the
government, Ahluwalia said, "Low inflation gives us a lot of
room in (the) next six months to use all available instruments
to ensure growth picks up."

Inflation for the week ended March 7 dipped to a
three-decade low of 0.44 per cent and is expected to turn
negative in the coming weeks. The government is slated to
announce inflation figures for the week ended March 14 on
Thursday.

Making a case for more measures to boost growth,
Ahluwalia said, "In spite of high fiscal deficit there is a
case for additional fiscal stimulus for the next fiscal."

Since mid-September, the government had announced three
stimulus packages to help industry reeling under the impact of
the global financial meltdown.

Despite steps taken by the government and the monetary
measures announced by the Reserve Bank, it would be difficult
for the economy to clock 7.1 per cent growth rate, projected
by the Central Statistical Organisation (CSO) in its advance
estimates for national income in February.

The government came out with an Interim Budget in
February. The final Budget for 2009-10 is likely to be
unveiled in July after completion of the general elections for
the 15th Lok Sabha.

In order to inject more liquidity into the system and
signal a soft interest rate regime, RBI gradually reduced the
short-term lending (repo) rate and the percentage of funds
that banks are required to keep with the central bank (Cash
Reserve Ratio), from 9 per cent to 5 per cent.

In addition, Reserve Bank of India (RBI) also brought
down the short-term borrowing rate, the interest banks earn on
the funds parked with the central bank, to 3.5 per cent from 6
per cent.

The central bank is slated to announce the annual credit
policy for 2009-10 on April 21, which may provide further
monetary stimulus to the economy.