8% growth possible

8% growth possible
Hindustan Times, HT Business, December 24, 2009, Page 21

Finance Minister Pranab Mukherjee raised the level of optimism on the country’s economic growth on Wednesday, saying India’s GDP could grow by as much as 8 per cent in the current fiscal year, taking it beyond the peak forecast of 7.75 per cent made in the mid-term economic review tabled in Parliament last week.

It implies that the economy will grow at 9 per cent in the remaining two quarters of the year to make up for the slackness in the earlier quarters.

“If things go on as they are now, we expect the average growth could at around 7.75 to 8 per cent,” Mukherjee said. Mukherjee’s projections beat most analysts’ estimates.

“It would be more appropriate to say that it (growth) would be around 7.5 to 8 percent,” Mukherjee said at the annual meeting of the PHD Chamber of Commerce and Industry (PHDCCI).

"Some of the important issues and challenges in the short-to-medium term include price rises, (and) return to the path of fiscal consolidation," the minister said.

Mukherjee said farm output must grow 4 percent for the economy to expand 9 to 10 percent annually in the coming years.
The government will have to walk the wedge between fiscal discipline and a push for high growth. It has to decide the timing of rolling back the stimulus measures introduced to counter a downturn.

“You have to wait till the Budget," the finance minister said, replying to a question, when the government proposes to withdraw the stimulus packages.

The GDP growth has been improving from the 6.1 per cent in the first quarter (April- June) to 7.9 per cent in the second quarter (July-October) of the current financial year.

Mukherjee said a strong turnaround in the export sector may still be some months away.

“US, Europe, and Japan account for around 62 per cent of our exports and unless demand picks up in these economies the exports are not going to improve drastically.”