Stimulus to push GDP to 8%: Pronab

There were not enough indications that the economy was on a sustained recovery path, even though India would achieve an eight per cent gross domestic product (GDP) growth in 2010-11 on the back of successive government stimulus packages, chief statistician Pronab Sen said here.

“There is no evidence of fresh investment and in both consumption and investment there is a serious question of sustainability. For private demand also there is no case to believe that we are on a sustained demand scenario. Given the present indications, there is no strong demand recovery,” said Sen at an interactive session.

Apprehensive of a ‘sustained’ growth trajectory, Sen said the consumption demand was sluggish at 2 per cent, against the desired level of 5-7 per cent.

“The stimulus should continue until we are confident that private demand is back. The government has already started rolling back fiscal stimulus package, and RBI has also taken some steps in this monetary policy. RBI's future course of action depends on what evidences they have on the full revival,” Sen said.

In the last quarter of 2009-10, while consumer durables saw a 30 per cent increase in demand, consumer non-durables picked up just by one per cent.

Sen said that consumer durables purchase was not a good indicator of the economy's recovery, as it could be due to the the one-time rise in income of government employees on the back of implementation of the sixth pay commission.

Also, the sudden surge in demand could be due to apprehensions of stimulus roll-back and the subsequent increase in prices, he explained.

“Right now, we are seeing the 'bunching-up' impact on growth, as huge investments had bunched up due to the financial crisis. The projects which had stalled up in December 2009 have started again. Soon this will come to completion. Sustained growth depends on fresh investments,” Sen said. For growth beyond 8 per cent, there was a strong need to push exports, as India was poised to face stiff competition from countries like Japan, China and Brazil, said Sen.

According to the recent data, exports was growing faster than imports, he added.

“Last year, the rupee had depreciated, but now it is going up. There is a belief that unless there is an aggressive market intervention by RBI it will further go up,” Sen said.