Green shoots taking firm roots: Pranab

Green shoots taking firm roots: Pranab
The Hindu Business Line, December 24, 2009, P15

Our Bureau, New Delhi

The Finance Minister, Mr Pranab Mukherjee, on Wednesday said that the green shoots of economic recovery were firmly taking roots and noted that the pre-crisis growth levels of 9 per cent was within reach in the next few years.

For India to return to the high-growth trajectory of 9 per cent on sustained basis, it was crucial that agricultural growth return to 4 per cent growth levels, Mr Mukherjee said at the 104th Annual Session of PHD Chamber of Commerce and Industry (PHDCCI) here today.

He also emphasised that India cannot return to the 9 per cent growth levels unless there was robust growth in the US, Japan and Europe.

Mr Mukherjee expressed confidence that the economy would grow between 7.5 and 8 per cent this fiscal. While the Prime Minister's Economic Advisory Council had pegged the GDP growth estimate for the current fiscal at 6.5 per cent, the Reserve Bank of India has pegged it at 6 per cent with an upward bias.

In the recent mid-year review, the Government had pegged the GDP growth estimate for 2009-10 at 7.75 per cent. The economy grew 7.9 per cent in the second quarter this fiscal, much higher than the 6.1 per cent growth in first quarter and 6.7 per cent in 2008-09.

“The target growth of 9-10 per cent that the country had for long dreamt about is now within our reach,” Mr Mukherjee said.

Challenges

The strong growth projections notwithstanding, there are many challenges like price rise, fiscal consolidation, generating resources for developmental programmes and bridging the skill gap, Mr Mukherjee said.

The Finance Minister said that the stimulus package was working and that the economic recovery underway vindicated its role. On the timing of winding up the stimulus, Mr Mukherjee said that the Government will take a call on at the time of the next Union Budget.

On the proposed new Direct Taxes Code, Mr Mukherjee said that he had an open mind on the nine areas of concern for industry and other stakeholders. The areas of concern include the proposal to levy minimum alternate tax (MAT) on gross assets basis and also taxation of the withdrawals under the small savings schemes (introduction of EET system of taxation).