says GDP growth in the current fiscal 2013-14 may turn out to be at five per cent
Bhubaneswar, 6 January
The growth rate in the current fiscal 2013-14 may turn out to be modest at five per cent and in the next two to three years we can get back to the high growth rate track, said Dr C Rangarajan, chairman Economic Advisory Council to the PM.
Listing out the immediate challenges to the economy, he said taming inflation, containing the current account deficit, proper management or prioritization of subsidy as a fiscal consolidation measure are  the three challenges and they are all inter-related.
We have had three years of high inflation largely due to certain severe supply constraints, particularly of agricultural products. Monetary policy and fiscal policy have to play their part in containing the overall demand pressures. The non food manufacturing inflation in recent months has come down and remains in the range of 2 to three percent. However the headline inflation stays at a high level, he said.
The answer lies in increasing output and improving the marketing arrangements. In fact the present marketing arrangements with regards to vegetables are archaic and need to be reformed. We must provide retail business direct access to farmers and the mandi arrangements at the wholesale level need radical transformation, he said.
Delivering the Nalco Foundation Day lecture, Dr Rangarajan said there is a need to contain expenditures more particularly subsidies which need to be pruned, well focused and prioritized. It is up to the government to decide which subsidies must take preference over others. 
What is needed is to have a fix on the quantum of subsidies to be provided as a proportion of the GDP or of government revenue. This calls for policy actions which may not be popular, nevertheless such actions are needed, he said.
On the current account deficit, he said FIIs flows have turned positive after the US put off the idea of immediate tapering. There has been a decline in imports of gold and silver and exports are increasing. If the present trend in exports and imports continue the overall CAD may remain around $55 billion. In many ways the coming decade will be crucial for India. We need to overcome the low growth phase as quickly as possible, as growth is the answer to many of our socio-economic problems. We have launched a number of schemes aimed at broadening the base of growth, he said
Dr Rangarajan did feel that India can get back to the high growth trajectory and said it was necessary to ensure equity and social development. The high growth of over 9 percent in the recent past had enabled the government to undertake innumerable social security measures, he said.
There is no conflict between growth and equity as the ultimate objective of growth is improving the living standard of the people. Better health, education etc cannot be sustained unless there is growth he said.
Referring to the point that the growth in the current fiscal may be five per cent, Dr Rangarajan said the non farm sector growth can improve in the second half due to certain measures taken over the last six months like liberalizing FDI norms, resolution of some tax issues of concern to industry and fuel subsidy reform. 
A special emphasis is being laid on achieving the production and capacity creation targets in coal , power, roads and railways, he said. Bottlenecks in the clearance and implementation of large projects are being removed, he said. Finally exports have also started showing signs of increasing.
Delay in completion of ongoing projects , particularly in the power sector, coal production did contribute to the slowdown of the economy.
The phase of relatively low growth but this should not cloud over or underestimate the structural changes that have occurred and the greater resilience of the system. Much of the turbulence seen in the foreign exchange market in India is the last few months can be traced to external factors, he said.
Odisha Governor S C Jamir lauded the achievements of Nalco. CMD of Nalco Mr Ansuman Das welcomed the guests.