Economy to grow at 9% in FY12 despite scepticism: FM

The economy is expected to grow by 9% in the next fiscal, although some international institutions such as the International Monetary Fund have made lower projections for the 2011 and 2012 calendar years, Parliament was informed today.

In a written reply to the Rajya Sabha, Finance Minister Pranab Mukherjee said growth projections by any agency is subject to error.

"The Economic Survey 2010-11 indicates that outlook for the medium term remains bright and expects growth to be 9% (plus or minus 0.25%) for 2011-12," he said.

Mukherjee said the 9% growth projection is based on the strength of pickup in savings and investment rates.

The Finance Minister, however, added that some other organisations have given a lower growth projection for the Indian economy. For example, according to the IMF, Indian economy is expected to grow by 8.4% in 2011 and 8% in 2012.

"Growth forecasts, by whichever agency and however carefully made, are subject to error," he said.

Mukherjee said the Central Statistical Organisation has not made any growth projections for the next fiscal or beyond.

Regarding policy, he said the government has pursued "prudent macroeconomic policies" to keep the Indian economy away from the negative impact of the global slowdown.

"The government has strenghthened structural measures to promote growth, develop product as well as financial markets, and increased social spending to provide a stronger foundation to protect the poor," Mukherjee said.

The Indian economy grew at an average of over 9% between 2005-06 to 2007-08, before growth plunged to 5.8% in 2008-09 on account of the global economic downturn.

Last fiscal, the economy rebounded with a GDP growth of 8% and this year the government expects it to register an increase of 8.75%, plus or minus 0.35%.