The Finance Minister, Pranab Mukherjee on Wednesday said the economy could grow by 7.5 to 8 per cent during the current financial year, though price rise and fiscal consolidation remained areas of concern.
“The Mid Year Review projected a growth rate of 7.75 per cent (for 2009-10), but it would be more appropriate to say 7.5 to 8 per cent”, Mr. Mukherjee said, addressing the 104th annual session of the industry chamber PHDCCI.
The Review, tabled in Parliament by him last week, had said the growth rate during the year could exceed the optimistic projection of 7.75 per cent, up from 6.7 per cent recorded during 2008-09.
The Minister further said that a growth rate of 9-10 per cent, “which we have dreamt for a very long period of time is now within our reach and we have to achieve it“.
Indian economy was expanding at 9 per cent before it was hit by the global financial meltdown which pulled down the growth rate to 6.7 per cent during 2008-09.
During the second quarter (July-October) of the current fiscal, the economy grew by 7.9 per cent, more than what was estimated by any analyst or think tank.
Referring to areas of concern, the Minister said the short and medium term challenges before the government is to deal with price rise and increasing fiscal deficit.
Further report says
The government on Tuesday said that the fiscal stimulus given to the industry to combat the adverse impact of the global financial meltdown will not be withdrawn before the budget to be presented by Finance Minister Pranab Mukherjee in February.
“You have to wait till the Budget,” the finance minister said, replying to a question, when the government proposes to withdraw the stimulus packages.
After the collapse of Lehman Brothers in September 2008 which triggered the global financial crisis, the government had provided three stimulus packages to spur growth in a slowing down economy. These were in tandem with the measures taken by the Reserve Bank of India to make available more liquidity to the cash—starved industry.
The fiscal packages were mainly aimed at sacrificing tax revenue and raising public expenditure with a view to generating more demand for industrial goods.
With the economy recording a growth rate of 7.9 per cent in the second quarter (July—October), it is expected that the government may start withdrawing the stimulus, especially to contain rising fiscal deficit targeted to go up to 6.8 per cent of the Gross Domestic Product by the end of the 2009—10 financial year.
Addressing the captains of the industry here, Mr. Mukherjee said, “green shoots (of recovery) are now firmly taking roots. The recent data confirms it”.