Years of action required to bring down current account deficit: Dr C. Rangarajan

TEZPUR (ASSAM): Dr C. Rangarajan, chairman of Economic Advisory Council of the prime minister, Dr Manmohan Singh and former Governor of Reserve Bank Of India (RBI) current account deficit as proportion to GDP is expected to be around 4.7 percent.

Rangarajan who was in Tezpur University to inaugurate a programme of Indian Statistical Institute said“ This is lower than last year however in a absolute terms it will be not much. It will require actions over a period of year to bring it down to 2.5 percent of GDP. It may take some time to achieve this.”

He added, “Improvement of economy in other countries as world economy picks up will improve exports. In the import side we need to act on gold, coal and oil. In last two years we are importing coal, domestic production has to increase and effort must be on energy conservation.Fall in the prices of gold brings down inflation.”

He said that Indian economy’s growth rate in this fiscal will be around 6 per cent.

It is interesting that Rangarajan has in a paper titled `Growth or Austerity: The Policy Dilemma' co-authored with Alok Sheel in February last declared that Indian economy faces stagflation, a state of high inflation, and poor growth rate.

He said, “I think we will have growth higher than last year. It should be higher than the Central Statistical Organization (CSO) projection of 5%. This fiscal year growth rate should be around 6 per cent.”

He added this is basically due to three reasons. “Firstly there is good monsoon which means we are going to have good agriculture production. Secondly there is conscious effort of achieve target in production and infrastructure.”

He explained that key infrastructure projects in roads, power coal are going on. Public investment in these sectors is also a driver. Thirdly we have government which is stimulating the economy. The impact of all these will started coming towards the second half of this fiscal year.

Prime Minister Manmohan Singh has recently acknowledged that growth in 2013-14 is likely to fall short of the government's 6.5% target.