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RBI has recently lowered the growth projection to 6.5% from 7.3% in the wake of deficient monsoon and global economic problems
New Delhi: Deficient monsoon is likely to pull down the economic growth in the current fiscal to about 6%, from 6.5%, a year ago, the Planning Commission said on Friday, reports PTI.
“If we factor in that agriculture which would not be strong, growth would be closer to 6%. I don’t think we have sufficiently strong industrial turn around yet,” Planning Commission deputy chairman, Montek Singh Ahluwalia, told reporters here.
In case of the Twelfth Five-Year Plan (2012-17), he said the annual average economic growth could be around 8.2% as against the earlier estimate of 9% envisaged in the Approach Paper to the policy document.
As regards 2012-13, the Reserve Bank of India (RBI) has recently lowered the growth projection to 6.5% from 7.3% in the wake of deficient monsoon and global economic problems.
On whether special schemes were needed to tide over the drought like situation, Mr Ahluwalia said, “I don't think you need an incentive. These are all issues that state governments have to tackle. They are usually very keen to take corrective measures”.
He further said that rural employment guarantee scheme Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) can deal with the problem of unemployment in rural areas.
“The growth rate in agriculture will be lower and that means that certain amount of income and employment stress in rural areas will have to be countered. In that perspective the existence of the MNREGA scheme provides a kind of automatic stabiliser. If people need work because of the drought, they will get work through MNREGA”, Mr Ahluwalia said.
The country had faced several monsoon failures, he said, adding there are possibilities that the situation would improve in the coming months.
“They (the Indian Meteorological Department) have actually said that the overall monsoon position in the next two months would be better than the previous two months but the overall would be deficient. There is nothing new in this. We have known that it would be deficient in first two months,” he said.
Mr Ahluwalia further said that “this is not the first drought we have had. Droughts do create a problem and we know what to do when they happen”.
On the impact of drought on price situation, he said, “it is true that inflation has been a problem. It has come down from the double digit but virtually all the government forecast say that it will remain around 7% for sometime and that is not good enough”.
He further said that inflation is under control if it is between 5%-6% but “inflation is above that... it is a matter of concern.”
The headline or Wholesale Price Index (WPI)-based inflation in June was 7.25%, while at the retail level it was at an alarming 10.02%.