Finance minister: We could soon be back to 9% growth
November, 15th 2010
Finance minister Pranab Mukherjee on Sunday told a gathering of international CEOs here that the environment was conducive for the economy to revert to 9% growth.
The FM's assertion comes at a time when industrial growth plunged to a 16-month low of 4.4% in September and inflation remains at worying double-digit level.
Mukherjee, however, said, "In the short term, it is reasonable to expect that the economy will go back to the robust growth path of around 9% average that it was before the global crisis slowed (it) down in 2008." He said the challenge now is to find the means to cross the double-digit growth barrier in the coming year or two.
Though manufacturing growth has not been impressive in the latest industry data, the FM was of the opinion that the sector has been "showing buoyancy reminiscent of the pre-slowdown year".
For the second consecutive month this fiscal, industry performed poorly in September. Its growth plummeted to 4.4% in September after 6.92% in the previous month. Manufacturing sector, comprising almost 80% of Index of Industrial The Economic Times (IIP), grew at a slower rate of 4.5% in September, against 8.3% a year ago.
Mukherjee said, "Savings and investment rates have reached levels that even 10 years ago would have been dismissed as a pipe dream for India." He said these indicators were some of "the strongest co-relates of growth and do not fluctuate... they speak well for India's medium growth prospects".
While talking about inclusive growth, the FM said, "We are acutely conscious that if our efforts (on inclusive growth) have to bear fruit, we have to tackle issues of governance and service delivery."
Indian economy grew at an average rate of 9% during 2004-05 to 2007-08. After the global financial crisis, it slowed down to an average growth of 7% during 2008-09 and 2009-10. In the first quarter of this fiscal, economic growth rebounded to 8.8%.
This fiscal, the government expects GDP to grow by 8.5%. Talking about various reforms, Mukherjee said the government has decided to set up financial stability and development council, financial sector legislative reforms commission to rewrite financial sector loss.
He said efforts are under way to introduce new indirect tax (GST), while the direct taxes code has been unveiled to replace the archaic income tax act.