The higher inflationary trend in the country compared to other developing countries, coupled with a deficit monsoon and the revival in private credit and spending may hinder growth in India, IIM-A Prof Ravindra Dholakia, a member of the Sixth Pay Commission, has said.

He was addressing the Multidisciplinary International Conference on: Changing Economic Environment and Performance of nations: Canada and India” organised by M S University’s Department of Business Economics, Faculty of Commerce, on Sunday.

He said: “India is recovering. Heavy fiscal doses and substantial expansionary monetary measures would soon need corrections. Interest rates have an upwards pressure and inflation is likely to rise.”

He said that economic growth has slowed down from more than 9 to 6.7 per cent during 2008-10.

The trend of inflation is highest in India, among developing countries. In 2006, the inflation was 6.2 per cent, which increased to 6.4 per cent in 2007, touched 8.3 per cent in 2008, and again came down to 6.3 per cent in 2009, he added.

Prof Dholakia said: “The fact that the monsoon has not been so good can have an impact on the overall growth. The recent performance of Germany and France suggests that gradual withdrawal of the government may be better for revival. The US economy is on the path to recovery. If our exports pick up, our economy growth trajectory of nine per cent per annum can be fast.”

He added that the government is also commissioning investment projects at higher rates, adding that expansionary fiscal and monetary policy will ensure continuation of investment boom at least till 2012.