Rangarajan scales down growth forecast to 8 per cent from 8.2 %

With stubborn high inflation, slackening industrial expansion and global uncertainties posing a challenge to economic growth, the Prime Minister's Economic Advisory Council (PMEAC) today scaled down its for GDP growth forecast to around 8 per cent in 2011-12, from its earlier 8.2 per cent estimate.

''Growth rate of the economy can be close to 8 per cent,'' C Rangarajan, chairman, PMEAC said while speaking at a golden jubilee function of the Indian Economic Service officers.

He called for reducing the country's reliance on capital flows as a means to bridge the current account deficit (CAD), besides ensuring that the CAD did not exceed 2.5 per cent of GDP. Cautioning on the perils of 9 per cent plus growth , he said it would trigger inflationary pressures.

''If we continue to grow in the range of 8-9 per cent, as projected in the 12 th Five Year Plan, then we will have a current account of deficit of 2.5 per cent of the GDP.

I see, at this moment, a problem in financing the current account deficit of that order,'' he said.

He added the CAD was expected to exceed 2.5 per cent by the end of the fiscal.