New Delhi: Finance minister Pranab Mukherjee on Monday pitched for imparting fresh impetus to economic recovery to quickly revert to the 9% growth rate and cross the double-digit growth barrier.
“First challenge before us is to quickly revert to high gross domestic product (GDP) growth of 9%, and then to cross the double-digit growth barrier,” he said, while addressing a convocation of the Hamdard University here.
Reverting to the high growth rate of 9%, the minister added: “Calls for imparting fresh momentum to the impressive recovery gained in the past few months”.
“Although India’s growth story is going through exciting phase,” Mukherjee said, the country has challenges which are needed to be addressed.
Having grown by over 9% in the three years till 2007-08, India’s economic growth slipped to 6.7% in 2008-09 on account of the impact of global financial crisis.
Ever since the crisis, the government rolled out stimulus measures to support manufacturing sector and announced incentives for exports to new markets. However, in the budget for 2010-11 the finance minister partially rolled back some of the stimulus measures after the economy, especially the manufacturing sector, showed signs of firm recovery.
For the current fiscal ending 31 March, the economy is expected to expand by 7.2%. According to the recent estimates of the planning commission, the economy could grow by 8.5% in 2010-11 and 9% a year after that.
Mukherjee’s optimism for robust economic recovery comes from high industrial growth rate of 16.7% during January. However, the low growth rate of 4.5% recorded by core sector industries during February could be a cause of concern.
The big problem being faced by the economy is rising inflation, which was 9.89% in February and is expected to cross the double-digit mark soon. A worried Reserve Bank raised the repo and reverse repo (short term lending rates) by 25 basis points to 5% and 3.5% to prevent food inflation from spreading to non-food items.
Mukherjee in his Budget last month announced a host of initiative to boost growth and check rising prices and may announce some modification of the proposals while replying to discussion on Demands for Grants and Finance Bill in Parliament when it reassembles after the recess.