Mumbai: India’s economy should grow close to 9% in 2007/08, Finance Minister Palaniappan Chidambaram said on 24 September, and he said no conclusions could yet be drawn from weaker-than-expected industrial production data for July.
Growth in the fiscal year ending in March 2008 would be good, he told NDTV Profit television, adding he did not know if it would end up being 8.5%-- which the central bank has forecast -- or 9%. “My instinct tells me it will be closer to nine,” he said in New York. “That’s a good result at the end of the year.” The economy grew 9.4% in 2006/07, its fastest in 18 years.
Asked if he was concerned about data showing industrial output grew 7.1% in July from a year earlier, its weakest since October, Chidambaram said no conclusions could be drawn from one month’s data.
Some analysts have said the slowdown in output could due to tighter monetary policy moderating consumer demand and a stronger rupee hurting exports. The Reserve Bank of India has raised interest rates five times since mid-2006. It has also raised banks’ cash reserve requirements by 200 basis points since December.
“Figures with me show that the investment boom is still on, there has been no slowdown in investment, so we’ll have to wait and see why industrial production and core sector performance in July was lower than expectations,” he said.
Chidambaram said he would like to see both “friendly interest rates” and a “benign inflation rate.”