India’s economic growth rate is expected to accelerate to eight per cent in the next fiscal from 6.3 per cent projected for the current financial year, the Planning Commission has said.
The Commission in its recent assessment of the economy also expects economic growth to go up to nine per cent in 2011-12, and further to 10 per cent in 2014-15.
These assumptions were made by the Planning Commission while projecting the state of government finances before the Eleventh Finance Commission recently.
The global slowdown has pulled down India’s economic growth to 6.7 per cent during 2008-09 from about nine per cent a year ago. During the current fiscal, as per the Planning Commission estimates, growth rate may fall to 6.3 per cent.
In the first quarter of this fiscal, economy expanded by 6.1 per cent, and it is expected that growth rate would decelerate further in the second quarter before picking up.
In order to combat the impact of global crisis on the economy, the government and the Reserve Bank had come up with a host of stimulus measures, including tax cuts and making available liquidity to the cash-starved industries.
However, stimulus measures, comprising a cut in taxes and increase in plan expenditure, to boost up the economy widened the fiscal deficit to 6.2 per cent last year.
This fiscal, the deficit is projected to further increase to 6.8 per cent as the government continues the tax cuts, and increased the overall expenditure to over Rs 10 lakh crore.
With the global economy showing signs of recovery and the growth picking up, the Commission expects the fiscal deficit to come down to 5.6 per cent in 2010-11.
Thereafter, the deficit may decline further to 4.8 per cent in 2011-12, four per cent in 2012-13 and three per cent in 2013-14