Govt may raise growth forecast

With the economy maintaining high growth momentum in consecutive quarters this financial year, recording an average of 8.9 per cent, the government may soon come up with a higher growth forecast for 2010-11.

Earlier, the government had projected the economy to grow at 8.5 per cent this year, but in the mid-year review, to be released next week, the figure is likely to be revised upwards.

“Right now, we are in the middle of calculations. We had earlier given a projection of 8.5 per cent. It is likely that it will be revised a little bit,” Chief Economic Advisor Kaushik Basu told reporters on the sidelines of an event by industry body Ficci.

Basu said the mid-year review of the economy was scheduled to be tabled in Parliament on December 7 and the revised figures may be mentioned there.

He also said India had earlier disagreed with the International Monetary Fund (IMF) when it had projected over 9 per cent growth rate for the country.

“However, (with) the number that came in earlier this week, I am delighted to say they seem to be more right than we were. A growth rate of 8.9 per cent in the second quarter is a remarkable performance, because this was the quarter one year ago when the economy really picked up,” he said.

The latest data released by the Central Statistical Organisation (CSO) on Tuesday showed the economy clocked higher-than-expected growth in the July-September quarter, at 8.9 per cent. The growth was led by an increase in service sector output and farm output. The April-June quarter figure of 8.8 per cent was also revised upwards to 8.9 per cent.

Basu said there was no base effect advantage in the second quarter figures. “We were expecting to clock around 9 per cent growth by next year. All we know is that future has come upon us sooner than we were anticipating,” he added.

A growth of 9 per cent in 2010-11 will be significantly higher than 7.4 per cent growth recorded in 2009-10 and 6.7 per cent in 2008-09. The government had projected 9 per cent growth in 2011-12. Last time it recorded higher than 9 per cent growth was in October-December 2007-08 (9.3 per cent).