Mumbai: Government’s chief economic advisor, Kaushik Basu, on Wednesday said that the economic growth in the fourth quarter of the current fiscal would likely be around 8.5% as the economic recovery is beginning to take hold.
“In the third quarter, economy did not do well as agriculture shocks were concentrated...in Q4, we expect a growth of 8.5%,” Basu told reporters.
On the back of improving economic prospects, the overall GDP growth in the next fiscal is likely to be around 8.5% and could go up to 9% in the year after, Basu said.
“In FY 11, our expectation is that the growth will cross 8.5% with a plus or minus of 0.25%. The year after that, we are expecting growth to be back to the nine% level,” Basu said.
The central statistical organisation had pegged the FY 10 GDP growth at 7.2% on the back of a lower-than-expected slide in agricultural output and a healthy recovery in industrial performance.
Noting that monsoon and developments in global economies were beyond the control of policy-makers, Basu said India would have no difficulty to get back to the 9% growth path if these factors turned favourable.
”(Factors) like huge drought and international downturn are always very much beyond our control. We can get back to the nine per cent growth from year FY 11, which is very much on the cards,“ Basu said.
Commenting on inflation, Basu said that the inflation has started spreading to non-food items but is expected to start declining from now on and will be significantly low from end-May.
“Inflation has picked up little bit on non-food sectors, which was not the case earlier...we expect to see it going downward from March and very low by end-May or June,” Basu said.
Observing that the pick-up in industrial growth is a healthy sign for the economy, Basu said that the overall inflation for the full fiscal was unlikely to cross four per cent.