Return to 9% growth a priority: FM

Return to 9% growth a priority: FM

Mumbai: India’s economy is gaining momentum, the finance minister said on Tuesday, and said attaining double-digit expansion and beyond is a priority.

“I will not say we are out of the woods, but signs of recovery are positive," finance minister Pranab Mukherjee said during a speech on Tuesday.

“The immediate task before us, as I mentioned in the Budget speech, is to quickly revert to the GDP growth path of 9% and then find the means to cross the “double digit growth barrier," he said in a speech delivered at an event in the financial hub Mumbai.

While India is on track to grow at 8.5% in the fiscal year that ends in March 2011, it is also grappling with wholesale price index (WPI) inflation that is like to have hit 10.8% in June, with markets widely expecting the Reserve Bank of India (RBI) to raise interest rates for the fourth time since March on 27 July.

Headline inflation is set to be released on Wednesday.

“We have emphatically left behind the impact of the economic slowdown and have moved forward to achieving accelerated economic growth," Mukherjee said, adding that industry had also regained its growth momentum.

“While it is felt that our industrial sector has regained its momentum, analysts are keenly observing and examining ways of supporting and sustaining the growth momentum with increased investment and capital formation," he said.

India’s factory output rose at its slowest pace in seven months in May, gaining 11.5% from a year earlier, well below analysts’ forecast of a 16% rise and the revised 16.5% growth in April.

India’s economy grew 7.4% in the 2009-10 fiscal year.