India can grow at 9% despite soaring oil prices: Montek

Indian economy expert and vice president of planning commission, Montek Singh Ahluwalia on Tuesday said to the media that despite spiralling prices in the crude oil, India can achieve 9% growth rate this year too, if some added measures would be taken.

Interacting to reporters after a high-level delegation meeting with Pakistani planning commission deputy chairman Salman Faruqui in the capital, Montek said, “I believe the 9% growth rate that we are talking about for the Indian economy can be maintained even with present level of oil prices though some added measures will be needed.”

However, he also added, “If oil prices soars with this speed, it would not easy to maintain the Gross Domestic Product (GDP) rate at 9%.”

Responding over how can India continuously maintain 9% growth rate this year, planning commission Dy. Chief clarified, “To reduce the dependency on oil and to explore alternative modes of energy, we can efficiently achieve the target of 9% growth in the medium term.”

India, since last two years is able to maintain the growth rate by 9%, but Union Finance Minister P Chidambaram has estimated the GDP between 8.0 to 8.5%, while Reserve Bank of India is estimating the growth rate at 8.0 to 8.25% this year.

Accepting the crucial role of crude oil behind growth of the country, Ahluwalia said, “Rising oil prices have pushed inflation to over 11% and the RBI is expected to announce more measures to tighten monetary policy to check rising prices.”, but he also added to tame it by proper management as he cited, “Whether it will impact growth or not, will depend on how we handle oil prices. The (Planning) commission is of the view that it is possible to handle the oil price situation without hurting the confidence of investors in the economy in the medium-term.”

For reining inflation, RBI on Tuesday has announced to hike the Repo Rate, the rate for short term debt and Cash Reserve Ratio (CRR); the banks have to deposit the slice of cash in Central Bank which banks own through customer’s deposit, by 0.50 %.