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High oil prices to derail 9% growth
NEW DELHI, FEB 26 (AGENCIES):
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Published on 27 Feb. 2011 12:21 AM IST
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The government on Friday expressed concern at the surging international price of crude oil and said if it continued to rise and go beyond $160 a barrel, it will be impossible to achieve 9% GDP growth. Briefing the media on the Economic Survey, finance minister’s chief economic adviser Kaushik Basu outlined the dangers posed by rising crude prices to projected growth.
Said the projected target of 9% growth next fiscal may not be possible if the international crude rises to $160 and beyond.
The government’s worst fears may come true as the London Brent crude on Friday climbed to a two-year high close of $111 per barrel while futures topped $97 per barrel on the New York Mercantile Exchange. India imports around 75% of its petroleum needs. Basu said that apart from the rising crude prices, other factors are favourably inclined to clocking double-digit growth over the next three years.
He, however, expressed concern at rising food prices. On the overall inflation front, he said the rate at the end of the year was likely to hover around 7% and may come down thereafter. But he said that growth and inflation go hand in hand. “We have to live with high inflation if the country has to grow rapidly,” Basu said. Average inflation over the next couple of decades would have to be 5% if GDP has to grow at 9%, Basu added.
Finance minister Pranab Mukherjee too expressed his concern at the rise in oil prices triggered by the turmoil in the Arab world.

 
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