FY10 GDP growth won't fall below 6%: Subbarao

The Reserve Bank of India (RBI) on Tuesday (April 21) came out with its Annual Policy Statement. Apart from cutting key short-term rates to boost growth, the regulator also forecast the country’s gross domestic product (GDP) growth at 6% for the financial year 2009-10.

When asked if there was any pressure from political quarters to give out the 6% GDP growth forecast — the government’s official estimate for this year’s GDP growth stands at 7.1% — RBI Governor Dr Duvvuri Subbarao said there wasn’t. “It was our best professional judgment that growth in FY10 would actually be 6% and there was a considerable amount of debate on what the number would be,” he said. The RBI Governor also added that he did not expect the GDP growth estimate to be revised with a downward bias later. “With the available evidence and judgments, I would say that going below 6% is a remote possibility.”

Subbarao said it was a fearful situation to be in when the country’s GDP growth was expected to come down. “When I go to international conferences, they say India is growing at 6%. But I keep reminding them (the western countries) that adjusting from 9% to 6% is as difficult and challenging as adjusting from 2.5% to 0%,” he said.

The RBI Governor added that he expected the 6% GDP growth phase to be over in FY10 and that things would improve post that. “The apprehension [that it would go beyond that] is far-fetched. Everyone in the world is talking of a global recovery, but how soon will it come? [I think it could be] late 2009 or 2010. Very few people are saying it will be 2011 and beyond. It’s my firm view that once global recovery starts, India’s recovery will kick in and will be sharp and swift,” he said. “I don’t think we will be locked in the low-growth number for an extended period of time.”