India's growth rate reviving slowly, says Kaushik Basu

New Delhi, Mar 15 (ANI): The Chief Economic Adviser to Finance Ministry, Kaushik Basu, on Thursday forecasts a 7.6 percent growth rate for the 2012-13 fiscal year, and said growth will revive slowly due to a drop in investment and savings rates.

Speaking on the figures mentioned in the annual Economic Survey of India, Basu said: "During the next year, that is 2012-13, India's growth rate will be 7.6 percent, plus or minus 0.25. This is a revival, but a slow revival. This year, the expected growth, and we don't dispute the figure that the government has put out officially, which is 6.9 percent, we expect roughly that.

"So, going back into 7.6 is a revival, but still nowhere near where India was," he added.

Basu said that the revival was slow owing to a drop in investment and savings rate, which was expected to decline further in the coming fiscal.

"Investment rate is 35.1 percent, savings rate is 32.3 percent. This is down from where we were earlier. Three years ago, investment rate was over 38 percent, savings rate was above 36 percent. There could be one more year of a slight slowing down of the savings and investment rate," said Basu.

"So, the growth will come on the back of that slight slowdown, so it's going to be slow pickup, 7.6 percent," he added.

Speaking on relevance of social dimension while framing economic policies, Basu said the countries that uphold qualities like of honesty, integrity, trustworthiness etc tend to grow faster.

"If a society has lots of people who are cheating, that society tends to do worse. There were these cross-country studies which showed that societies which had developed qualities of honesty, integrity, trustworthiness, and the examples were coming from both Asia and Europe-Scandinavian countries, east Asian countries-where these qualities were very high, they tend to grow faster. So, pure economics is not just fiscal policy and monetary policy. These social qualities matter," he said.

The Economic Survey for fiscal 2011-12, which was presented by Union Finance Minister Pranab Mukherjee today, has estimated the Indian economy to grow by 6.9 percent in 2011-12 mainly due to weakening industrial growth.

The Economic Survey for 2011-12 has, however, predicted 7.6 percent GDP growth in 2012-13 and 8.6 percent in 2013-14.

This indicates a slowdown compared not just to the previous two years, when the economy grew by 8.4 percent, but also from 2003 to 2011, except 2008-09 economic downturn, when the growth rate was 6.7 percent. (ANI)