Buoyed by the tremendous success of Coal India IPO, Union Finance Minister Pranab Mukherjee on Tuesday asserted that with the disinvestment process on track and overall recovery in the economy, India was poised to grow at 9 per cent.
Asserting that India was all set to post economic growth of 8.25 to 8.75 per cent this fiscal, Mr. Mukherjee told the Economic Editors Conference here that the recovery was also broad-based across industry, services and agriculture.
Clearly happy over the massive response to Coal India IPO that had been oversubscribed 15 times, the Finance Minister said the Indian economy was gaining momentum from the pre-crisis era that began in 2008. “The economy will certainly grow at 8.25-8.75 per cent this fiscal as the economy was gaining momentum. Our intent now is for gradual exit from the stimulus measures,'' he remarked.
He said fiscal consolidation was needed, but it should be calculated and exit should be country-specific. India's gross domestic product had expanded by 8.8 per cent in the first quarter of this fiscal, led by a robust 12.4 per cent expansion in the manufacturing sector.
The economy had expanded by just 6 per cent in the corresponding period of last fiscal.
“In the short-term, it is reasonable to expect that the economy will go back to the robust growth path of around 9 per cent average that it was on before the global crisis slowed it down in 2008,'' Mr. Mukherjee said. He said there had been a revival in investment and private consumption demand, though the recovery was yet to attain the pre-2008 momentum. Secondly, exports had also recorded an impressive growth since November-December 2009. Stating that high prices still remained an area of concern as food inflation was still hovering at around 15.5 per cent, Mr. Mukherjee said there was a limit to which money supply could be curbed to rein in demand.
“High inflation has affected family budgets. Prices of food items like vegetables, rice, wheat and pulses remain a big concern. The government had taken measures both from supply and demand sides to control high inflation. On the supply side, the Reserve Bank India has taken measures to curtail excess liquidity,'' he said.
“We can't create liquidity crisis. Sometimes you cannot control the prices, but mitigate the adverse impact on affected people. We are providing food at subsidised prices. The RBI has taken suitable measures,'' he said.
At the same time, he said the overall annual inflation, as opposed to price rise in food prices, had come down to 8.6 per cent in September after remaining in double-digits till June 2010. “I do feel the annualised inflation will come down to 6 per cent. The fiscal deficit target of 5.5 per cent for this fiscal will be met,'' he remarked.
“It is often said that reforms in India are slow reflecting the democratic sanction process — but, nevertheless, sure as it has larger backing. Going forward, I believe the Indian economy would take its rightful place in the global economic order,'' he stated.
