7.4 pc growth rate achievable in 2009-10: Planning Commission

New Delhi, Apr 5 (PTI) Adequate measures to boost public
investment in construction may propel India's Gross Domestic
Product (GDP) growth rate to 7.4 per cent in 2009-10, the
Planning Commission has said, even as international agencies
have lowered the country's growth projections.

"If a major effort (in addition to stimulus packages) to
further increase public investment in construction can be
mounted, we can have a higher growth rate... A Rs 50,000-crore
absorption, i.e. 1 per cent of GDP can, raise the growth rate
by up to 2.2 percentage point," a Planning Commission report
submitted to Prime Minister Manmohan Singh said.

Stating that even if half of this figure is realised,
growth rate for 2009-10 could be 7.4 per cent, it added.

The economy, otherwise, is likely to expand by 6.3 per
cent in the current fiscal, aided by stimulus packages and
UPA's flagship programme National Rural Employment Guarantee
Scheme, the report said.

However, the World Bank has projected a growth rate of 4
per cent for India in 2009-10, while according to the
Organisation for Economic Cooperation and Development it would
be 4.3 per cent. IMF said it could be 5.1 per cent.

On the measures taken by the government so far, the
Commission report said liquidity have increased and improved
credit flow, stimulated demand through higher government
expenditure on various programmes and cut in tax rates and
promoted exports.

The report, prepared by Commission member Kirit Parikh
views the measures announced in the interim budget as increase
in public consumption and investment.

Hit by global financial meltdown, the Indian economy,
which was projected to grow at 9 per cent, would witness a
reduction of 4.3 percentage points in growth rate, it said.

The reduction was calculated mainly on account of 18 per
cent decrease in real export volume. This could reduce the
growth rate by 2.7 per cent, the Commission report said and
pointed out that another 1.2 per cent reduction could take
place on account of decrease in foreign inflow by 20 per cent.

Also, a 1 per cent reduction was projected due to fall in
private investment by 10 percentage points which is
equivalent to 3 per cent of the GDP.

Fall in crude prices by USD 20 could improve the GDP by
0.6 per cent.

"Since the impact multipliers are larger and should be
considered as outer bounds, the minimum growth rate that can
be expected when the world GDP growth falls to –0.6 per cent
and without any counter measures by the government should be
4.7 per cent," the report said. PTI NAM
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