Indian economy could grow by 8% in current fiscal: Pranab

Indian economy could grow by 8% in current fiscal: Pranab

Finance Minister Pranab Mukherjee listens to Secretary General, PHD Chamber, Krishan Kalra at the 104th Annual Session of PHD Chamber of Commerce and Industry in New Delhi on Wednesday. PTI "The Mid Year Review projected a growth rate of 7.75 per cent (for 2009-10), but it would be more appropriate to say 7.5 to 8 per cent", Mukherjee said, addressing the 104th annual session of the industry chamber PHDCCI.

The Review, tabled in Parliament by him last week, had said the growth rate during the year could exceed the optimistic projection of 7.75 per cent, up from 6.7 per cent recorded during 2008-09.
The Minister further said that a growth rate of 9-10 per cent, "which we have dreamt for a very long period of time is now within our reach and we have to achieve it".

Indian economy was expanding at 9 per cent before it was hit by the global financial meltdown which pulled down the growth rate to 6.7 per cent during 2008-09.
During the second quarter (July-October) of the current fiscal, the economy grew by 7.9 per cent, more than what was estimated by any analyst or think tank.

Referring to areas of concern, the Minister said the short and medium term challenges before the government is to deal with price rise and increasing fiscal deficit.

Food inflation, according to recent data, shot up to a decade's high of 20 per cent and the fiscal deficit is projected to go up to 6.8 per cent in the current fiscal, more than what was prescribed in the Fiscal Responsibility and Budget Management (FRBM) Act.
The country, Mukherjee said, would need a 4 per cent growth in the agriculture sector to achieve a 9-10 per cent growth.
Following drought and floods in several parts of the country, the agriculture and allied sector growth rate in the second quarter decelerated to 0.9 per cent from 2.7 per cent in the corresponding period last year.
Farm sector must grow at 4 percent: Mukherjee
For India to achieve equitable growth, farm output will have to expand at 4 percent yearly, the Finance Minister said.
He, however, said the agriculture sector would end up growing at a slower pace due to the adverse effect of inadequate monsoons and drought earlier in the year.
"There has been a downtrend in agriculture growth because of unexpected flood and drought. It was 2.5 percent in the first quarter of this fiscal and one1 percent in the second quarter. I do not know what it is for the third quarter."
When asked when the government planned to withdraw the stimulus package extended to trade and industry, Mukherjee said: "You will have to wait till the budget."
The finance minister was also cautious in his response to the signs of a turnaround in the export sector.
"Exports in November have been encouraging, but at the same time, we cannot expect a robust turnaround unless there is a robust growth in the US, Europe and Japan, which is 60 percent of our export markets."
On the positive side, the Minister said the industry was showing signs of recovery by posting over a 10 per cent growth rate in October.
Replying to a question on withdrawal of stimulus measures meant to combat the impact of the global financial meltdown, Mukherjee said, "wait till the Budget (in February)"
Referring to the Direct Tax Code, Mukherjee said there were nine areas of concern and the Ministry would take inputs from various agencies, including industry chambers, before finalising the Code which will replace the Income Tax Act, 1961.
The Minister said the Code would considerably simplify the income tax laws to the benefit of individual tax payers and corporate. 

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