FM certain of India achieving 8.5-9% growth

FM certain of India achieving 8.5-9% growth

Says infra investment needed to maintain momentum in medium to long term

His remark comes as a confidence booster for the economy, which slowed in the first quarter (April-June) with inflation remaining considerably high and a tepid economic recovery in the western world undermining consumer and business confidence.

“In the medium and long term, India remains firmly on a high GDP growth path of 8.5 to 9 per cent,” Mukherjee said at the silver jubilee celebration of Asian Development Bank-India Partnership Forum in New Delhi. The country’s economy moderated to 7.7 per cent in the first quarter of this fiscal as against 8.8 per cent in same period last fiscal, industrial activity too slowed in the last two months of July and August, and the Reserve Bank of India’s recent monetary stance appeared to have done too little to check inflation which stood at 9.72 per cent in September.

But analysts believe that inflation above 9 per cent has raised the possibility of further monetary tightening in the next monetary policy review on October 25, compounding the woes of an already slow economy and halting industrial activity.

Mukherjee also cautioned against emerging challenges and concerns to economy, one of them being, food security and volatility in food prices and said increased agriculture production on a sustained basis would be the only long-term solution to address supply constraints that have been hurting economic growth.

He also sought ADB’s expertise in improving farm productivity and its assistance in implementing projects that contribute to a more efficient use of natural resources, including scarce water.

The finance minister said, an investment in quality infrastructure was critical to achieve high economic growth rate lauded Asia’s multilateral development bank’s contribution in development of India’s creecking infrastructure sector in which an investment of $1 trillion is envisaged in the 12th five-year plan beginning 2012.

Keen to push up capital inflows in infrastructure sector, the finance ministry is also considering raising the limit of foreign investment in bonds of infrastructure companies from the current $5 billion.

Talking to reporters on the sidelines of the event, Economic Affairs Secretary R Gopalan described the present level of inflation too high for comfort but expressed hope that it would come down to 7 per cent by March-end.

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