Economy will clock +6% growth rate this fiscal:FM

Economy will clock +6% growth rate this fiscal:FM

New Delhi: Finance Minister Pranab Mukherjee today expressed optimism that it would be possible to clock over 6% growth rate in the current fiscal and said there is no scope for anxiety in pursuing reforms in financial sector and disinvestment.

“In the last five years, the GDP growth rate was 8%. It was 6.7% in 2008-09. This year, it would be difficult to say because of drought. If there is no major difficulty or constraint, it would be possible to have a +6% of GDP in 2009-10," he said during an interaction with members of Editors Guild of India here.

He said last year had been particularly difficult in the second half because of high prices of petroleum products, high rate of inflation and global financial crisis.

Mukherjee said excess liquidity had to be mopped up and the two packages announced by the Prime Minister late last year and subsequent pacakges in the wake of the meltdown had helped arrest the fall in growth.

After referring to drought and other problems, he said his another area of concern was that people were commenting about the reforms agenda. “Reforms are a continuous process. It is going in the right direction. There is no scope for anxiety about pursuing financial sector reforms."

On disinvestment, Mukherjee said he was not going to give numbers, but consultations were on with various ministries and disinvestment department on the issue. Two major decisions have already been taken on disinvestment in NHPC and Oil India which will hit capital markets early next month.

Admitting that the financial consolidation programme was seriously affected this year as both fiscal and revenue deficits were high at +6 and +8% respectively, he said he expects them to come back to 5% by 2011.

“This high level of fiscal deficit would create problems. Sooner we come back to lower levels, it would be better, he said.

Mukherjee said this year’s budget had stepped up development outlays to big levels for the first time when it went up by Rs82,000 crore to Rs325,000 crore, a step up of 36-37%.

“We had to do this so that it will increase development in rural sector and support consumer industry. Our understanding is that the strategy is paying," he said.

Referring to the Foreign Trade Policy, announced yesterday, he said India’s major importers—US and EU—are facing problems, because of which Indian exports could be hit.

“We are hoping that it would be possible to have a quantum jump in five years and exports double by 2014," he said.

Referring to drought situation, he said 252 districts have been declared drought affected, of which 58 are in Uttar Pradesh and 32 in Haryana, which produce a major part of kharif crops.

He said experts have predicted that agriculture production would be down by 20-25% because of drought.

Despite this, the current agriculture year would begin with surplus of rice and wheat stocks, though sugar position is not comfortable. Imports will be resorted to ease the situation.