FM sees 9-10% growth in FY13

Finance Minister Pranab Mukherjee today said India could achieve growth levels of 9-10 per cent in the 2012-13 financial year, and would grow by about 8 per cent in the preceding year. The government expects a 7 per cent growth rate for 2010-11.

“We can expect over 7 per cent growth in 2010-11. After the Eleventh Five-Year Plan, we may be able to reach that magical figure,” Mukherjee said on the closing day of the India Economic Summit here.

After growing at over 8.5 per cent for five years, India’s economic growth slowed to 6.7 per cent in 2008-09. The economy grew at 5.6 per cent in 1980s and 6.5 per cent in 1990s. Mukherjee said 6.7 per cent was a modest growth in the given circumstances.

Mukherjee also made it clear that the government would focus on driving domestic demand until key developed markets recovered and would not exit fiscal stimulus measures until necessary. However, he added, “this (stimulus measures) cannot continue for a long period of time...I have stated a number of times that in due course we shall have to take corrective measures.”

The finance minister said the government would continue to provide fiscal stimulus to boost domestic demand until recovery was seen all over the world, especially the developed economies like North America, Europe and Japan.

Prime Minister Manmohan Singh had on Sunday indicated that a phaseout of the stimulus measures might happen next year. Mukherjee himself last week stated that he would relook at the fiscal incentives that formed part of the stimulus measures during the Budget. “We need to ensure strong local demand till there are clear signs of recovery in the developed world,” he added.

The finance minister added that the government needed to invest heavily in infrastructure, especially power, to boost local demand and economic growth.

He also said massive investments were required in agriculture and infrastructure sectors, and acknowledged that it would not be easy for the domestic economy to compensate for the loss in exports through domestic demand.

Tax pacts
India today said it would renegotiate with all the 77 countries with which it has double tax avoidance agreements (DTAAs) to track tax evasion, following allegations of black money being stashed by many Indians in Swiss banks.

“I have asked the Revenue Department to reopen negotiations for all 77 DTAAs, so that we can have real time exchange of information on tax evasion and tax avoidance,” Finance Minister Pranab Mukherjee said.