Warning that hard days were coming, Union Finance Minister Pranab Mukherjee on Wednesday termed as "not disappointing’’ the 6.9 per cent GDP growth recorded in the second quarter especially in view of global developments and asserted that government will continue to adjust its policies to maintain growth.
"'Now hard days are coming. Present uncertainty with regard to global situation is creating concern about FII and FDI flows. We will continue to adjust our policies according to the developments. Taking into account the trend of the last two quarters together, it appears that the GDP growth would be around 7.3 per cent. The growth performance is not all that disappointing,’’ Mr. Mukherjee told journalists here. The GDP growth in 2010-11 stood at 8.5 per cent. "Going forward, I am confident that we will be recovering some of the loss in our growth momentum,’’ he said. GDP growth in the second quarter of the fiscal slowed to 6.9 per cent from 8.4 per cent in the corresponding period last year, mainly on account of a decline in mining and manufacturing output.
He said the Indian economy was battling both global and national problems and this was getting reflected in the mining and manufacturing figures. "We are having multiple problems... slow growth of Europe and America... problems within the country and outside the country as well. We shall have to try to face the situation and to see what best we can do at this given situation,’’ he added.
Mr. Mukherjee said the higher 9 per cent growth projected in the Budget would be difficult to achieve as GDP growth stood at only 7.3 per cent in the first half. Mukherjee said even though second quarter growth has declined, there are some encouraging signs in the form of a rise in exports. Some key sectors like power and steel have also shown stronger growth, he added.
Mr. Mukherjee said the government is committed to its indicated fiscal balance for the current fiscal and is monitoring the resource mobilisation efforts as well as our expenditure. "We would not hesitate to take the required correctives to remain on the path of fiscal prudence so that the short to medium-term growth prospects are not undermined,’’ he said.
On the other hand, the Prime Minister's Economic Advisory Council (PMEAC) termed that 6.9 p.er cent growth as lower than expectation and said good performance by farm sector would take annual growth for 2011-12 to 7.5 per cent. "The growth in second quarter is lower than expectation. The poor performance of manufacturing sector and falling industrial production have led to lower growth,’’ PMEAC chairman C. Rangarajan said.
However, he exuded confidence that growth would be better in the next two quarters. "Performance of the economy in the third and fourth quarters should be better on account of improved performance of agriculture. We will still be able to reach the target of 7.5 per cent growth for the fiscal,’’ he remarked..
