Hyderabad: Achieving an economic growth of 7.5 percent in the current fiscal would depend on monsoon and the international economic situation, the Chairman of Prime Minister's Economic Advisory Council said here on Monday.
"The downside risks are two or three (for maintaining 7.5 percent GDP growth). One, is the behaviour of the monsoon. This is predicted on the assumption that the monsoon will be normal and therefore the agricultural production will also be reasonable," C Rangarajan said.
"The second (risk) is the international situation. It is expected that the international situation will remain more or less in the same way it existed in the last few months.
"So, unless there is a sharp deterioration in the world or the global economy, we should be able to maintain the 7.5 percent rate of growth," he added.
He was speaking at a function on ITsAP Annual Industry Awards for Best Software Services and Green IT initiatives.
Rangarajan, however, did not give a direct reply to a question on the impact of recent Supreme Court order cancelling 122 licences of 2G spectrum on Foreign Direct Investments into India.
He said if the country continues to maintain the rate of growth of 7.5-8 percent for the next several years, there may not be any decline in FDI investments.
In reply to a query on prices, Rangarajan said though the non-food manufacturing inflation has shown a definite sign of decline, food inflation is once again showing signs of a rise, forcing the overall inflation to be still at a higher level.
"In fact, vegetable prices seem to be again on the rise...when we talk about food inflation, it includes not only cereals but also commodities like milk and vegetables," Rangarajan said.
Inflation in food items rose sharply to 9.94 percent in March, as against 6.07 percent in February. Food articles have 14.3 percent share in the WPI basket.
On deregulation of diesel prices, he said price hike should be done in a phased manner.
"I think we really need to make some changes with respect to diesel prices. The point is that since the prices of diesel have not been adjusted for a long time, the required adjustment to bring it on a par with international prices may be very high.
"It may not be possible to do it at one go. Therefore we need to do it in phases," he explained.