Organisation for Economic Co-operation and Development (OECD) economic survey on India, which was released here today, said the economy is likely to have a slower GDP growth rate of 8% in 2008.

"The Reserve Bank has been progressively hiking interest rates, and this is likely to slow down the GDP growth rate to 8% in 2008," the survey said.

The report also said that the government’s target of 10% GDP growth by 2011 is achievable if reforms continue.

Earlier, speaking at the same meeting, finance secretary D Subbarao said that India’s growth potential continues. "We can achieve 9% GDP growth rate as the 11th Plan document states that the challenge is to step up agriculture growth, expand employment opportunities, bridge infrastructure deficit, improve public services delivery and manage globalisation and its effects."

He added that the government is on track to reduce fiscal deficit to 3% and eliminate revenue deficit by the end of financial year 2008-09.

"We are on track to reduce the fiscal deficit to 3% next year, and hopefully eliminate the revenue deficit," he said.

The FRBM Act mandates the central government to wipe out revenue deficit and bring down fiscal deficit to 3% by 2008-09.


Updated at 1130 hrs - Real income can double in a decade: OECD
 
OECD today said real income in India can now rise by at least 7% annually on a sustainable basis - enough to double real income in a decade and put the nation on path to become an advanced economy.

OECD Secretary General Angel Gurría said that developments in India are today far more sensitive to the movements in the world economy."Today, foreign exchange is no longer a constraint, and India's exports of services exceed all but eight OECD member-countries while imports were larger than all 12 OECD member-countries in 2006."

Gurría also called on India to extend the Fiscal Responsibility and Budget Management (FRBM) Act by five more years.

"Long term growth prospects should be bolstered by continuing the current fiscal consolidation and by extending the FRBM Act by five more years. This will free up resources for growth in private investment. It will also show resolve and provide a very visible sign of fiscal discipline to the markets," Gurría said.

Gurría’s comments come at a time when there is a debate in the policy establishment  of the country to step back a little from adhering to the targets set out by the Act in order to increase public expenditure on social sector as well as make the growth process further inclusive