Rangarajan Pegs Q4 GDP Growth Around 9 Percent (02-Mar-2010)
Prime Minister''s Economic Advisor Counsil (PMEAC) Chairman C Rangarajan stated that the economy is expected to grow by around 9% in Q4.
He also said that it would make up for the slow expansion in the October-December period to clock a growth of 7.2% this fiscal.
He also said that for a 7.2 % growth rate, the economy has to grow by about 9% in Q4 and should be able to grow in the last quarter to reach the growth rate of 7.2 %.
However, mainly due to a robust decline in farm output and certain services, GDP growth declined to 6 % in the December quarter.
While due to the worst drought in 40 years, farm output contracted by a 2.8% points, there was a 2.2% point downward spiral in community, social and personal services sectors too.
Rangarajan also said that the industrial growth will carry on to be robust and rabi (winter) crops are also expected to be good.
Industrial production increased by a stunning 16.8 % in December, against the contraction of 0.2 % in the same month a year ago.
Meanwhile, in its advance estimates, the Central Statistical Organisation has pegged the economic growth during 2009-10 at 7.2 %.
It expanded at a stunning 7.9 % in Q2, raising hopes that the economy is now on sustained growth path, while the economy managed to grow by just 6.1 % in Q1 of this fiscal.
On Saturday, Finance Minister Pranab Mukherjee also said that despite Q3 showing just 6 % expansion, the economy might register 7.2 % growth rate in the current fiscal.
On the other hand, Planning Commission deputy chairman Montek Singh Ahluwalia added that despite global factors being uncertain, he is confident that Q4 GDP growth will be close to 8 %.
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He also said that the stimulus measures will not be fully withdrawn until a massive recovery is achieved.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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