Finance Minister Pranab Mukherjee on Thursday maintained that despite the negative fall-out of a 15-20 per cent projected decline in kharif crop output owing to a deficient monsoon, the economy would still post “some reasonable growth of over six per cent” in 2009-10 and possibly grow further by over eight per cent next fiscal “if there is no further adverse situation over which we have no control.”
In his interaction with captains of industry at a meeting organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) here, Mr. Mukherjee made a fervent appeal to desist from pressing the panic button over the current drought situation.
“In view of the revival of confidence amongst corporates and the improvement in the international economic situation, a return to an eight per cent plus GDP [gross domestic product] growth rate was within the realm of possibility in the medium-term.”
The Finance Minister argued that although the deficient rainfall to the extent of 26 per cent this year was likely to result in a 15-20 per cent shortfall in kharif production in the wake of 252 districts in 10 States being declared as drought-affected, the government was seized of the problem and would tackle the adversity through its buffer stock and strategic reserves of foodgrains.
“From the picture of sowing, one can easily estimate that there is a likelihood of a shortfall to the extent of 15-20 per cent,” he said while pointing out that the exact quantum (of the shortfall) would be known only during harvesting.
Seeking to allay industry’s apprehensions over the perceived adverse effects of the proposed Direct Tax Code, Mr. Mukherjee said: “The rates of taxation set out in the Code were illustrative and not actual. The actual rates will be determined and have to be ratified by Parliament.”