Pranab for fresh impetus to return to 9% growth

Finance Minister Pranab Mukherjee today pitched for imparting fresh impetus to the economic recovery to quickly return to the nine per cent growth rate and cross the double-digit growth barrier.

“First challenge before us is to quickly revert to high Gross Domestic Product (GDP) growth of 9 per cent... and then to cross the double-digit growth barrier,” he said, while addressing the convocation of the Hamdard University here.

Returning to the growth rate of nine per cent, the minister added, “calls for imparting fresh momentum to the impressive recovery gained in the past few months”. Although India’s growth story is going through an “exciting phase”, Mukherjee said, the country had challenges that needed to be addressed.

Having grown by over nine per cent in the three years till 2007-08, the country’s economic growth slipped to 6.7 per cent in 2008-09 on impact of global economic slowdown.

Following the crisis, the government had rolled out stimulus measures to support manufacturing sector and announced incentives for exports to new markets. However, in the Budget for 2010-11, the finance minister partially rolled back some of the stimulus measures. This was because the economy, especially the manufacturing sector, had showed signs of firm recovery.

For the current financial year, the economy is expected to expand by 7.2 per cent. According to the recent estimates of the Planning Commission, the economy could grow by 8.5 per cent in 2010-11 and 9 per cent a year after that.

Mukherjee’s optimism for robust economic recovery comes from high industrial growth rate of 16.7 per cent during January. However, the low growth rate of 4.5 per cent recorded by core sector industries during February could be a cause of concern.

The big problem being faced by the economy is the rising inflation, which was 9.89 per cent in February and is expected to cross the double-digit mark soon. A worried Reserve Bank of India raised the repo and reverse repo (short term lending rates) rates by 25 basis points each to 5 per cent and 3.5 per cent, respectively, to prevent food inflation from spreading to non-food items.