Kolkata: India’s third-quarter growth should be “pretty good” and the economy should be back at a 9% growth rate by the next fiscal year, Kaushik Basu, chief economic adviser to the finance ministry, said on Friday.
India’s economy grew at 6.7% in 2008/09, slowing from rates of 9% or more in the previous three years as the global credit crisis hit business activity. However, the economy clocked in a 7.9% expansion in the September quarter.
On Thursday, federal chief statistician Pronab Sen said that he expected Asia’s third-largest economy to grow 6-6.5% in the December quarter, lower than the previous quarter, due to a contraction in farm output.
Basu, however, said the third-quarter economic growth should be “pretty good” as agriculture contributes only 17% to the country’s national income.
“In addition to this, in the corresponding quarter last year, India did pretty badly and from the industry growth rate the feedback that we are getting suggests that manufacturing and services sectors are doing exceptionally well,” Basu said.
India’s economy will grow at rates of 7% and above in the coming quarters, helped by a recovering global economy and rapid expansion in domestic industrial output, a Reuters poll published earlier this week showed.
Basu said the rise in inflation was sector specific and was not the only factor that should prompt a roll-back of fiscal stimulus measures.
“Having said that, you cannot continue with the stimulus for too long. But, how and when it will be rolled back is still on the table,” Basu said.