Basu expects growth to surpass official target of 8.5%

Chief Economic Advisor Kaushik Basu today said the overall growth during the current financial year might marginally surpass the official target of 8.5 per cent to around 8.75 per cent.

“The growth might be a little higher than what is projected, but I would like to maintain the current projection of 8.5 per cent,” he said on the sidelines of a conference hosted by the Indian Chambers of Commerce.

Basu also said the growth in the third quarter (October-September) could be better than that of the first quarter (April-June) when the economy clocking 8.8 per cent growth.

“The second quarter might be a little tough, but the third quarter growth will be better than the second quarter …agriculture growth will be very good given the monsoon and sowing data, services is also expected to pick up,” he added.

He later added that a 12.4 per cent growth rate in the manufacturing sector was “remarkable “and he did not expect the growth momentum in the sector to slow down going ahead. “I do not see any significant downsides to manufacturing growth…in the first quarter the growth has been remarkable and this means that there has been employment generation,” Basu said.

Given that weekly inflation data suggested that food inflation was again on an upward trend by rising to 11.47 per cent for the week ended August 27, Basu said inflation was a concern but food inflation was expected to go down in the coming months, primarily due to a good kharif harvest.

“Inflation is a concern but it is expected to go down due to various reasons,” he added.

Basu further added that low production of wheat in Russia and Ukraine might create some pressure in India. However, the overall inflation would see a downward trend in the coming months, he added.