Bad monsoon can affect growth rate: PM's adviser
29 Jun 2009, 1837 Hrs

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New Delhi, June 29 Suresh Tendulkar, the chairman of the Prime Minister's Economic Advisory Council, has warned that the projected growth rate could come down marginally if there is a bad monsoon, as it will affect agricultural output.

"It may be marginally shorter because agriculture's weight into the GDP is going down, 6-6 and half percent," said Tendulkar, on the sidelines of a business conference here.

Tendulkar added that high bank-lending rates continue to concern the Indian economy, which was hit hard by sluggish demand at home and the global slump.

"Policy rates have been brought down considerably. They have not been reflected in bank rates. They are now getting reflected gradually," he said.

The central bank has cut its key-lending rate by 425 basis points between October and April to lower borrowing costs, but commercial banks are yet to match those cuts.

The government had slashed factory duties and stepped up public spending to pump prime the economy as the growth rate tripped to 6.7 percent in 2008/09 from 9 percent or more seen in the previous three years.

Last week, the government had said the rains, considered to be a lifeline to India's trillion-dollar economy, were expected to be less than normal for the first time in four years.

According to experts, inadequate rains could increase prices of food products, dampen domestic demand and delay recovery of the economy and stoke inflation. (ANI)

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