New Delhi: The government on Monday said it would stick to its target of economic growth of over 6% this fiscal, even as erratic monsoon and drought in many parts of the country would slow down the economic expansion in the next six months.
“There is no reason to revise my target which I am expecting 6% plus. Whether it will be 6.5% or 6.7%, whether I will be able to retain last year’s (economic growth rate), I do not know. There may be some deceleration in second and third quarters ... but the fourth quarter will make up,” finance minister Pranab Mukherjee said in his opening remarks at the Forum of Financial Writers.
The economy grew by 6.1% in the first quarter of this fiscal, the fastest pace since the global financial crisis deepened in the middle of September last year.
“But, I am little doubtful whether we would be able to maintain the same rate in the second quarter and the third quarter. Agriculture growth in the second quarter and the third quarter will be little less,” Mukherjee said.
The Reserve Bank of India has already projected the economy to grow by 6% this fiscal with “upward bias” and the government stood by that estimates.
The Planning Commission had also said that the growth may fall in the next two quarters, but it would rebound in the fourth quarter to make economy clock 6.3% growth in the entire fiscal.
Farm output grew by 2.4% in the first quarter this fiscal against 3% in the year-ago period, but there are apprehensions that weak monsoon would damage kharif crops and agriculture growth would be lower in the second and the third quarters.
Mukherjee said large parts of Uttar Pradesh and Bihar, the major grains producing states, have been declared drought affected. “Fifty-eight districts of undivided Uttar Pradesh and 38 districts of undivided Bihar (are drought hit), which is a substantial part,” he said.
However, kharif crops have been protected in Punjab and Haryana by utilizing underground water, Mukherjee said. Wheat season will start with a surplus of 17.7 million tonnes and rice season with a surplus of 14 million tonnes, he added.
Industrial growth has started to pick up, but slowly, he said. Industrial growth bounced back to 7.8% in June compared to 5.4% in the same month last year.
However, the finance minister did not see immediate revival of exports unless some markets like Europe rebound. “Exports are still not growing, and I do not see immediate revival of exports unless European economies have robust revival. Over 60% of our total exports have been account for by the US, Europe and Japan, and unless there is robust revival there, exports would not pick up.”