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Kaushik Basu supports India's growth story; foresees GDP back at 8.5-9% in 2 years

Kaushik Basu, the World Bank Chief Economist expressing his hopes on India's growth story stated that the Asia's third largest economy is likely to revert the growth rate to the pre-global crisis level of 8.5-9 percent after two years. According to Basu, for the current fiscal, however, a growth rate of 5.5-6 percent should be good enough taking into account various global and domestic factors.

Finance Minister P Chidambaram, foreseen the future with year ending 5.5 to 6 percent growth, barring any unexpected shocks, and next year getting back to 7 percent growth, and in 2014-15 getting back to 8 percent growth, kept India remained between 5.5 and 6, an unrealistic figure. India's growth rate in 2011-12 had slipped to a nine-year low of 6.5 percent.

Moreover, the fiscal deficit in the current year, according to Finance Ministry's estimates is likely to be 5.3 percent of the Gross Domestic Product (GDP), up from 5.1 percent estimated in the budget for 2012-13. Referring to India's fiscal problems, Basu said “in the global scenario, the situation was not that bad for the country.”

However, according to industry experts, including credit rating agencies, fiscal deficit could be even as high as 6.1 percent in view of rising gap between revenue and expenditure.

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