9% GDP growth unlikely before 2012: Tarapore

At an event organised by Dan & Bradstreet last evening,Tarapore said it would be necessary for the global economy to recover fully for the economy to revert to 8.5 to 9 per cent growth path.

Welcoming the Government’s plans of stepping up investments in public and private sectors,he said that as these sectors have a long “gestation lags”,increased investment in these sectors could not be reflected in an immediate increase in output.

The present Government,he said,has quite correctly given a policy tilt to poverty alleviation,thereby emphasising the quality of GDP growth.

“A basic dictum of microeconomic policy is that the pattern of investment determines the pattern of output and the pattern of output,in turn,determines the distribution of income,” the former banker said. TARAPORE 2 LAST “This is the underlying rationale for the strong tilt in the Union Budget for 2009-10 towards social sector investment. Ultimately,enduring growth requires that it be inclusive,” Tarapore said.

He,however,does not agree with the Government’s policy of financing its large fiscal deficit without crowding out of the commercial sector and increasing interest rates.

“If we are able to attain all these objectives without the attendant pain,it would be ideal,but unfortunately after unrestricted sinning,it is not easy to move to paradise again,” Tarapore said.