Poor rains may ruin economic growth, says FM

Even as the economy has started moving “upward slightly” “scanty” rainfall received by the country so far may impact the economic growth, Finance Minister Pranab Mukherjee cautioned on Friday.

“The economy has started moving slightly. But one is not quite sure (of growth) as problems may arise from adverse impact of scanty rainfall,” he told the Lok Sabha during the Question Hour.

As India’s economy is primarily agro-based growth in the crucial agricultural sector plays a vital role in boosting the overall growth of the economy.

“The Agriculture Minister is making the assessment. We are also making the assessment (of the situation arising out of less rainfall). This is a problem. But we are trying to handle it,” he said. This statement of Mukherjee assumes significance as for the first time he cautioned that below average (scanty) rainfall could adversely affect the growth of the economy.

Early signs
Mukherjee recently projected that the economy in view of early signs of recovery, would post at least 6.7 per cent economic growth rate—a rate achieved in 2008-09— in the current financial year.

He said of late the economy was showing signs of recovery. Two consecutive stimulus packages and other fiscal measures have paid dividend to some extent, he said adding “we finally achieved a growth rate of 6.7 per cent in 2008-09 against a projection of 5.4 per cent”. In response to members’ concern over the government’s ambitious borrowing programme crowding out the funds for the industry especially small and medium enterprises, Mukherjee assured the House that there was no reason for elbowing out the small and medium industry who need credit. “We are adopting a balanced approach.

In consultation with the Reserve Bank of India we will take measures to ensure that funds requirement of the private sector is properly met.”

The minister justifying government’s huge borrowing plan saying  there were very limited options. “Our basic priority is to arrest the slowdown in the economic growth rate.

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