Food inflation a major concern even on 7-7.5 per cent economic growth: PM's advisor

C Rangarajan, chairman of the Prime Minister's Economic Advisory Council (PMEAC), has projected that the Indian economy would grow of 7 to 7.5 per cent during the current financial year despite poor performance of the agriculture sector on account of drought and floods.

He said the economy would grow between 7 and 7.5 per cent but agricultural growth may fall by 1 to 2 per cent. The PMEAC chief was speaking at the College of Defence Management in Hyderabad on the challenges before the Indian economy.

Pointing out that food inflation was a major concern, he said that agricultural growth rate should not fall below 4 per cent for food security as 60 per cent of the population lived in rural areas.

Though the economy had done well during the second quarter (July-September) registering 7.9 per cent growth, output of agriculture and allied sectors fell to below 1 per cent.

Food inflation in the first week of December soared to a decade's high of 20 per cent on rising prices of pulses, potato and other vegetables.

Referring to the impact of the widespread drought and devastating floods on the farm sector, the PMEAC chairman said rice output might decline by 13 million tonnes.