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Though the economy is poised to record a 5.5 per cent growth in the current fiscal, it would not be good enough for alleviating the country's poverty situation. "A 5.5 per cent growth will result in a little above 3.5 per cent per capita income growth, which although impressive in the global context, may not be good enough for ameliorating the condition of more than 40 per cent of the population living below the poverty line," according to an interim report, prepared by local research body, Centre for Policy Dialogue (CPD). While releasing the report yesterday at a press briefing, Executive Director of the CPD Dr Debapriya Bhattacharya said that crossing the threshold of seven or eight per cent growth rate as enshrined in the mid-term macro-economic framework of the interim poverty reduction strategy paper (I-PRSP) is important in the context of worsening income disparity in the economy. He, however, said that the possibility of "flight of capital" could not be ruled out as the economy was inundated with around 10,000 crores of excess liquidity while investment did not pick up further. The surplus liquidity lying with the system is looking for viable business opportunities. But if investment does not pick up further, the economy will face an inflationary pressure or capital flight", Bhattacharya said. Even the country would be able to reduce dependency on foreign aid if it could have utilised this excess liquidity in productive business ventures, he added. Revenue collection was on target, export growth was stable and agricultural production was steady, the report said, also noting that the fiscal started off on a relatively sound footing.

Positive movements are taking place in case of import growth, industrial loan disbursement, and financial sector reform, the report said. It, however, remarked that the marginal growth in the manufacturing sector, low level of foreign direct investment, paralysis in the privatisation process, transitory bubble in capital market and price spiral of essential commodities have eclipsed the macro-economic performance in the first part of the fiscal year (2003-04). The CPD analysis hoped that apart from the annual development programme (ADP) and inflation, almost all other major target indicators of the mid-term macro-economic framework of the I-PRSP would be achieved. The acceleration of ADP implementation from the second rather than the fourth quarter of the fiscal year remains one of the major tasks for FY04, particularly for crowding in private investment and improving quality of public utilities and social services. Dwelling on the recent monga situation in some Northern districts of the country, the report said, lack of participation by non-government organisations to help the vulnerable groups to cope with the hardship has aggravated the situation.