Economic Growth To Pick Up In Q4 (03-Mar-2010)
Finance Minister Pranab Mukherjee stated that the economic growth will increase in Q4 of the fiscal.
This will happen even as it declined to 6% in Q3 from around 8% in the preceding three-month period.
He said that he is confident that Q4 GDP will pick up.
However, he added that the economic growth during Q3 of this fiscal slowed down to 6% from 7.9% in the previous quarter due to the negative growth in agriculture by over 2%.
He said the double-digit food inflation is a huge problem and the Centre is taking steps along with the states in order to cool the increasing food prices in the coming months.
Meanwhile, even as the government had announced partial withdrawal of stimulus measures, Mukherjee said the recovery is not completely broadbased and carries on to be driven by government stimulus spending.
Previously, Finance Minister Pranab Mukherjee expressed confidence the economy would soon break the double-digit growth barrier.
He also said that the stimulus measures will not be fully withdrawn until a massive recovery is achieved.
Due to the ambiguity prevailing in the developed economies, Mukherjee remained concerned over high food inflation and the uncertain nature of revival in exports.
The growth of the domestic economy will be 6.9 per cent for the current financial year, pegged by the leading economists in a survey conducted by the industry chamber Ficci, as the farm sector is expected to drag down the economy. The figure is much below the government projection of 7.75 per cent this fiscal.
The leading economists have also broadly opined that the exit of the stimulus measures should happen only in sectors which are showing strong growth.
Moreover, the survey predicts that agricultural growth would contract by 1 per cent in this financial year, but the industry would grow by 8.5 per cent while the services by a smart 9 per cent.
The Ficci Economic Survey Outlook, which was released stated "Leading economists, drawn mainly from the banking and financial sectors, have forecast the GDP growth for 2009-10 at 6.9 per cent, with agriculture growing at a negative 1 per cent, industry by 8.5 per cent and services by 9 per cent...."
Further, the survey said that the growth trajectory would be adversely affected by a sudden stimulus withdrawal.
However, the finance minister earlier had said that the economy is expected to grow by about 7.75 per cent in the financial year ended March 2010, but the major concern is the food price inflation.
Moreover, Pranab Mukherjee also said that the government could unload surplus wheat and rice stocks for open market sale.
Meanwhile, the survey pointed out that the government may go for withdrawing the stimulus in sectors which are showing good performance.
Moreover, it said as the outlook for the global economy is still uncertain, the exports must continue to get support.
The GDP growth is projected to come down from 7.9 per cent in the second quarter to 6.8 per cent in the third quarter of this fiscal.
In the first quarter of this financial year, the economy grew by 6.1 per cent.
The economists'' survey by Ficci said that in the third quarter, the agriculture and allied activities would contract by 2 per cent due to the wide-spread droughts while in the final quarter of the fiscal, it would be stagnant.
However, the survey predicts that the industrial growth would be more than 10 per cent in the third and fourth quarters, while services would expand by 8.8 per cent in the third quarter while 9 per cent in the fourth quarter.
Moreover, the Prime Minister Manmohan Singh last month stated that returning to a speedy expansion pace after a slow 2008 due to the global economic crisis; economy is expected to rise by 7% or a little more in the current fiscal.
However, the momentum of growth was disturbed by the global economic downturn in 2008 and declined to 6.7% in 2008 09, expecting to achieve 7% or a little more in 2009 10.
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