Economy to grow by 6.5%: Panagariya

Noted economist and former vice chairman of Niti Aayog Arvind Panagariya expects the economy to grow by over 6.5% in the current financial year.

He said the macroeconomic indicators have remained stable for the past three years, with the current account deficit hovering around 1% and inflation moderating. "Expectations of implementation of the GST beginning July 1, 2017, led to some disruptions in supply during the April-June quarter, with the quarterly growth rate declining to 5.7%. But we should see recovery coming our way with the growth rate during 2017-18 reaching 6.5% or higher," he said.

Panagariya pointed out that a recently released Goldman Sachs report makes a plausible case that the economy will accelerate to 8% growth in 2018-19. Reversing a five-quarter slide in GDP growth, the Indian economy bounced back from a three-year low to expand by 6.3% in July-September as manufacturing revved up and businesses adjusted to the new GST tax regime.

On whether the government could relax fiscal deficit target to boost economy, he said, "Personally, I do not believe that the Finance Minister and the Prime Minister would let their hard-fought success in achieving significant progress in fiscal consolidation slip past them at this stage in the game."