India To Break Double Digit Growth Barrier Soon (02-Mar-2010)
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He also said that the stimulus measures will not be fully withdrawn until a massive recovery is achieved.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.
However, he said that he feels the fundamentals of the economy are strong while the positives from their recent performance outweigh the negatives.
This is so that one can hope to see the economy breaking the double-digit growth barrier in the very near future which is vital for lessening poverty in India.
The FM has partially withdrawn stimulus sops in the Budget by increasing excise duties by 2% points across the board and boosting tax rates on petroleum products.
Meanwhile, on withdrawal of the emergency measures to boost the economy, he said that he is committed to fiscal consolidation in the interest of the economy''s capacity to sustain growth in the medium to long term.
But, he said that it can be fully effected when the recovery in private demand, both consumption and investment is sufficiently robust.
Investments have been the key growth driver in the past and will continue to be for at least another 10 years.
He said that there are some concerns about sustaining the bounce-back seen in exports in November-December 2009 due to uncertainties about the recovery in the developed economies.
Previously, 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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