Date:09/08/2008 URL: http://www.thehindu.com/2008/08/09/stories/2008080960041100.htm

Tamil Nadu

Expert predicts 8-9 per cent growth in next 12 months

Special Correspondent

“In the remaining four years of the 11th Plan, it will clock 9 per cent”

CHENNAI: In the next 12 months, India will achieve an average of 8-9 per cent growth, and in the remaining four years of the 11th Plan, it will clock 9 per cent, Arvind Virmani, Chief Economic Advisor of the Union Finance Ministry, has said.

Delivering his keynote address at a session on the ‘State of the Indian Economy’ organised by the Confederation of Indian Industry (CII) here on Thursday, he said: “Don’t get confused by the cyclical trends and projections. We have not revised the range. After the release of the Index of Industrial Production (IIP) figure, we may revise it. At present, our priority is to control inflation. However, I am confident that the growth will be in the bottom range of 8 per cent for the current year and an average of 9 per cent will be met by the 11th Plan Period. In the next 12 months, inflation will be in the range of 5-6 per cent.”

Panel report

Mr. Virmani said the hi-powered committee, constituted by the Prime Minister under the chairmanship of B.K. Chaturvedi to examine the financial position of oil companies, had submitted its recommendations to the Centre. “If the recommendations are accepted by the Centre, the whole issue relating to fiscal problems will be sorted out within a reasonable time. We also want to put the recommendations on the Web.”

He criticised analysts for projecting what he called a wrong picture on inflation. The source of oil shock was common for all countries; the U.S. Producer Price Index (PPI) at 16 per cent, he said, was much higher than India Wholesale Price Index (WPI) and the U.K. WPI.

According to Mr. Virmani, the acceleration in inflation in the first half of 2008 over 2007 was due to three sets of commodities: edible oils; iron; and steel and mineral oils.

Rajeev Ranjan, Secretary, Commercial Taxes and Registration Department, said Tamil Nadu was the first State to introduce sales tax, but not the Value Added Tax. The delay, coupled with the multiplicity of taxes, led to a loss of Rs.5,000 crore. In the current year, the department planned to net Rs.20,000 crore in tax revenue. “The State has 4.5 lakh registered VAT dealers. Around 500 top dealers account for 78 per cent of the VAT revenue. Still, a large percentage of dealers are out of the tax net. Our immediate challenge is to widen the tax net and improve tax compliance.”

C.V. Karthik Narayanan, past chairman, CII-Southern Region, said Tamil Nadu was one of the leading States in the Human Development Index, per capita income and industrial development.