Big Bang Reforms of Early 1990s Will Not Happen Again: C Rangarajan

New Delhi: C Rangarajan, Chairman of Prime Minister's Economic Advisory Council (PMEAC) said that big bang reforms of the type of early 1990s will not happen again. Now is the time for incremental change, he said at an economic summit here and India has potential to grow at 8 per cent without fuelling inflation.

"If you are going to have a investment rate in the range of 32-35 per cent, I would still say 8 per cent growth rate is potential rate of growth in economy and it is possible to grow at that rate even without provoking high level of inflation," he said at India Summit organised by UK-based magazine The Economist.

As per the latest estimates for 2012-13, investment rate is close to 35 per cent, he said.

He further said, "I do not subscribe that view that high growth warrants high inflation..," he said.

Noting that inflation is showing some signs of moderation, he said "of course it is not anywhere near the comfort zone that we would like to have."

Wholesale Price Index (WPI) for the month ended March moderated to 3-year low of 5.96 per cent against Reserve Bank's projection of 6.8 per cent.

The headline WPI inflation is expected to be around 6 per cent in the current fiscal, with primary food inflation around 8 per cent, fuel at about 11 per cent and manufactured goods at around 4 per cent.

On Current Account Deficit (CAD), he said, "it is still high and we need to act."

The government has taken a number of steps in the last few months to narrow CAD including curbing gold import and increasing exports.

The moderation in gold imports is expected to help bring down the CAD to 4.7 per cent, from 5.1 per cent of GDP in 2012-13.

However, in value terms the CAD is expected to be higher at $100 billion, as compared to $94 billion last fiscal.

"I certainly believe low growth phase has bottomed out," he said.

Rangarajan said economy can pick up in the current fiscal from 5 per cent to 6.4 per cent.

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