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economy | IST

Fixing banks the most critical step for higher GDP, says Montek Singh Ahluwalia

Mini

The UPA government could have tried to reign in the deficit in a better manner following the 2008 financial crisis, Ahluwalia said.

Growth during the UPA 1 regime was much higher than growth under the NDA government, said former deputy chairman of India's planning commission, MonteK Singh Ahluwalia.
UPA 1 saw an average GDP growth of 8.9 percent, he said and added that the Eurozone crisis took away some of the growth during the UPA 2 regime. He added that growth between 2003-2007 outstripped global economic growth.
Ahluwalia further added that the economy could grow at over 7 percent in the current time and could target growth of 8 percent in the future.
BANKS
Fixing the banking system in the country would be the most critical step in getting to a higher GDP rate, Ahluwalia said, and added boom periods tend to bring a bit of recklessness in lending.
He further pointed to the global financial crisis of 2008 and said the rise in the fiscal deficit during this time was a result of the global recession, and added it would have been "madness" not to have a high deficit in the following years.
Ahluwalia however added that the UPA government could have tried to reign in the deficit in a better manner following those years. He added that he was in favour of raising petrol prices and said the government should have taken this step to bring the deficit down.
He said the current account deficit was sustainable at 2 percent of the GDP.