FM pegs GDP growth at 8% in fiscal 2012

FM pegs GDP growth at 8% in fiscal 2012

Says govts main concern is rising prices

“If oil prices continue to rise, it would be difficult to achieve higher GDP. GDP may come down to 8 per cent from (the projected) 9 per cent,” Mukherjee told reporters on the sidelines of the Asian Development Bank annual meeting.

The government’s primary concern now is to manage inflation while sustaining high growth rate. Hardening of global commodity prices, particularly oil prices has accelerated inflation, he said, adding, “Our projection is 7.5 to 8 per cent inflation during the year.”

Earlier this week, the Reserve Bank of India too had lowered economic growth projection to 8 per cent due to measures taken to tackle high inflation especially food prices. India’s economy is estimated to have clocked 8.6 per cent growth in 2010-11.

Major concern

Mukherjee said inflation, particularly the increase in food prices, is a major concern for India as well as other developing countries. “We are trying to reduce it through supply and demand side management,”he said.

“On supply side we are trying to remove bottlenecks and on demand side RBI has adjusted interest rates to mop up excess liquidity in a manner so that it may not affect the economic activity,” he said. Overall inflation was 8.98 per cent in March and has been above the 8 per cent mark since January, 2010.

Referring to speculations in global commodity market, Pranab Mukherjee said increase in prices is not merely a function of demand and supply, but also driven by huge financial flows into the commodity market in search of higher return.